Correlation Between HOME DEPOT and CHEVRON CDR
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and CHEVRON CDR 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 HOME DEPOT and CHEVRON CDR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME DEPOT CDR and CHEVRON CDR, you can compare the effects of market volatilities on HOME DEPOT and CHEVRON CDR 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 HOME DEPOT with a short position of CHEVRON CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and CHEVRON CDR.
Diversification Opportunities for HOME DEPOT and CHEVRON CDR
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HOME and CHEVRON is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR and HOME DEPOT 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 HOME DEPOT CDR are associated (or correlated) with CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and CHEVRON CDR go up and down completely randomly.
Pair Corralation between HOME DEPOT and CHEVRON CDR
Assuming the 90 days trading horizon HOME DEPOT is expected to generate 14.1 times less return on investment than CHEVRON CDR. In addition to that, HOME DEPOT is 1.15 times more volatile than CHEVRON CDR. It trades about 0.01 of its total potential returns per unit of risk. CHEVRON CDR is currently generating about 0.12 per unit of volatility. If you would invest 1,958 in CHEVRON CDR on September 13, 2024 and sell it today you would earn a total of 109.00 from holding CHEVRON CDR or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. CHEVRON CDR
Performance |
| Timeline |
| HOME DEPOT CDR |
| CHEVRON CDR |
HOME DEPOT and CHEVRON CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and CHEVRON CDR
The main advantage of trading using opposite HOME DEPOT and CHEVRON CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, CHEVRON CDR 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 CHEVRON CDR will offset losses from the drop in CHEVRON CDR's long position.| HOME DEPOT vs. Walmart Inc CDR | HOME DEPOT vs. Amazon CDR | HOME DEPOT vs. UPS CDR | HOME DEPOT vs. UnitedHealth Group CDR |
| CHEVRON CDR vs. Westshore Terminals Investment | CHEVRON CDR vs. Canadian Utilities Limited | CHEVRON CDR vs. Reliq Health Technologies | CHEVRON CDR vs. CVS HEALTH CDR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |