Correlation Between TOPPS TILES and Home Depot
Can any of the company-specific risk be diversified away by investing in both TOPPS TILES and Home Depot at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TOPPS TILES and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOPPS TILES PLC and The Home Depot, you can compare the effects of market volatilities on TOPPS TILES and Home Depot and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TOPPS TILES with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOPPS TILES and Home Depot.
Diversification Opportunities for TOPPS TILES and Home Depot
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TOPPS and Home is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding TOPPS TILES PLC and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and TOPPS TILES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TOPPS TILES PLC are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of TOPPS TILES i.e., TOPPS TILES and Home Depot go up and down completely randomly.
Pair Corralation between TOPPS TILES and Home Depot
Assuming the 90 days horizon TOPPS TILES PLC is expected to under-perform the Home Depot. In addition to that, TOPPS TILES is 1.29 times more volatile than The Home Depot. It trades about -0.26 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.41 per unit of volatility. If you would invest 35,974 in The Home Depot on September 1, 2024 and sell it today you would earn a total of 4,711 from holding The Home Depot or generate 13.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOPPS TILES PLC vs. The Home Depot
Performance |
| Timeline |
| TOPPS TILES PLC |
| Home Depot |
TOPPS TILES and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOPPS TILES and Home Depot
The main advantage of trading using opposite TOPPS TILES and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOPPS TILES position performs unexpectedly, Home Depot can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Home Depot will offset losses from the drop in Home Depot's long position.| TOPPS TILES vs. Consolidated Communications Holdings | TOPPS TILES vs. Scandinavian Tobacco Group | TOPPS TILES vs. SEALED AIR | TOPPS TILES vs. Cogent Communications Holdings |
| Home Depot vs. FEMALE HEALTH | Home Depot vs. WILLIS LEASE FIN | Home Depot vs. SBM OFFSHORE | Home Depot vs. CVS Health |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |