Correlation Between HOME DEPOT and Pfizer
Can any of the company-specific risk be diversified away by investing in both HOME DEPOT and Pfizer 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 Pfizer 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 Pfizer Inc CDR, you can compare the effects of market volatilities on HOME DEPOT and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME DEPOT and Pfizer.
Diversification Opportunities for HOME DEPOT and Pfizer
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HOME and Pfizer is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding HOME DEPOT CDR and Pfizer Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc CDR has no effect on the direction of HOME DEPOT i.e., HOME DEPOT and Pfizer go up and down completely randomly.
Pair Corralation between HOME DEPOT and Pfizer
Assuming the 90 days trading horizon HOME DEPOT CDR is expected to under-perform the Pfizer. But the stock apears to be less risky and, when comparing its historical volatility, HOME DEPOT CDR is 1.06 times less risky than Pfizer. The stock trades about -0.07 of its potential returns per unit of risk. The Pfizer Inc CDR is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,154 in Pfizer Inc CDR on October 16, 2024 and sell it today you would earn a total of 71.00 from holding Pfizer Inc CDR or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HOME DEPOT CDR vs. Pfizer Inc CDR
Performance |
| Timeline |
| HOME DEPOT CDR |
| Pfizer Inc CDR |
HOME DEPOT and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME DEPOT and Pfizer
The main advantage of trading using opposite HOME DEPOT and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME DEPOT position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| HOME DEPOT vs. TGS Esports | HOME DEPOT vs. Sun Peak Metals | HOME DEPOT vs. Lion One Metals | HOME DEPOT vs. Sparx Technology |
| Pfizer vs. Advent Wireless | Pfizer vs. Champion Gaming Group | Pfizer vs. HOME DEPOT CDR | Pfizer vs. Brookfield Office Properties |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |