Correlation Between Gfl Environmental and Home Depot
Can any of the company-specific risk be diversified away by investing in both Gfl Environmental 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 Gfl Environmental and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gfl Environmental Holdings and Home Depot, you can compare the effects of market volatilities on Gfl Environmental 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 Gfl Environmental with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gfl Environmental and Home Depot.
Diversification Opportunities for Gfl Environmental and Home Depot
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gfl and Home is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Gfl Environmental Holdings and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Gfl Environmental 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 Gfl Environmental Holdings 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 Gfl Environmental i.e., Gfl Environmental and Home Depot go up and down completely randomly.
Pair Corralation between Gfl Environmental and Home Depot
Considering the 90-day investment horizon Gfl Environmental Holdings is expected to generate 1.32 times more return on investment than Home Depot. However, Gfl Environmental is 1.32 times more volatile than Home Depot. It trades about 0.06 of its potential returns per unit of risk. Home Depot is currently generating about 0.05 per unit of risk. If you would invest 2,938 in Gfl Environmental Holdings on August 23, 2024 and sell it today you would earn a total of 1,639 from holding Gfl Environmental Holdings or generate 55.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gfl Environmental Holdings vs. Home Depot
Performance |
| Timeline |
| Gfl Environmental |
| Home Depot |
Gfl Environmental and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gfl Environmental and Home Depot
The main advantage of trading using opposite Gfl Environmental and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gfl Environmental 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.| Gfl Environmental vs. Pro Dex | Gfl Environmental vs. Pure Cycle | Gfl Environmental vs. Quest Resource Holding | Gfl Environmental vs. ABIVAX Socit Anonyme |
| Home Depot vs. Small Cap Core | Home Depot vs. Freedom Holding Corp | Home Depot vs. Gfl Environmental Holdings | Home Depot vs. Growth Fund Of |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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