Correlation Between Home Depot and ProShares MSCI
Can any of the company-specific risk be diversified away by investing in both Home Depot and ProShares MSCI 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 ProShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and ProShares MSCI Transformational, you can compare the effects of market volatilities on Home Depot and ProShares MSCI 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 ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and ProShares MSCI.
Diversification Opportunities for Home Depot and ProShares MSCI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and ProShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ProShares MSCI Transformationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Trans 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 are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Trans has no effect on the direction of Home Depot i.e., Home Depot and ProShares MSCI go up and down completely randomly.
Pair Corralation between Home Depot and ProShares MSCI
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.01 times more return on investment than ProShares MSCI. However, Home Depot is 2.01 times more volatile than ProShares MSCI Transformational. It trades about 0.26 of its potential returns per unit of risk. ProShares MSCI Transformational is currently generating about 0.14 per unit of risk. If you would invest 39,300 in Home Depot on August 30, 2024 and sell it today you would earn a total of 3,419 from holding Home Depot or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. ProShares MSCI Transformationa
Performance |
| Timeline |
| Home Depot |
| ProShares MSCI Trans |
Home Depot and ProShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and ProShares MSCI
The main advantage of trading using opposite Home Depot and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, ProShares MSCI 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 ProShares MSCI will offset losses from the drop in ProShares MSCI's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| ProShares MSCI vs. Innovator Loup Frontier | ProShares MSCI vs. ProShares Pet Care | ProShares MSCI vs. Global X Telemedicine | ProShares MSCI vs. ProShares Online Retail |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |