Correlation Between Apple and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and HOME DEPOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and HOME DEPOT CDR, you can compare the effects of market volatilities on Apple 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 Apple with a short position of HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and HOME DEPOT.
Diversification Opportunities for Apple and HOME DEPOT
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apple and HOME is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT CDR and Apple 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 Apple Inc CDR 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 CDR has no effect on the direction of Apple i.e., Apple and HOME DEPOT go up and down completely randomly.
Pair Corralation between Apple and HOME DEPOT
Assuming the 90 days trading horizon Apple is expected to generate 1.3 times less return on investment than HOME DEPOT. In addition to that, Apple is 1.07 times more volatile than HOME DEPOT CDR. It trades about 0.05 of its total potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.07 per unit of volatility. If you would invest 2,091 in HOME DEPOT CDR on August 29, 2024 and sell it today you would earn a total of 664.00 from holding HOME DEPOT CDR or generate 31.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. HOME DEPOT CDR
Performance |
| Timeline |
| Apple Inc CDR |
| HOME DEPOT CDR |
Apple and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and HOME DEPOT
The main advantage of trading using opposite Apple and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Berkshire Hathaway CDR | Apple vs. JPMorgan Chase Co | Apple vs. Bank of America | Apple vs. Alphabet Inc CDR |
| HOME DEPOT vs. Eros Resources Corp | HOME DEPOT vs. Apple Inc CDR | HOME DEPOT vs. European Residential Real | HOME DEPOT vs. Canadian Utilities Ltd |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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