Correlation Between Home Depot and Cavanal Hill
Can any of the company-specific risk be diversified away by investing in both Home Depot and Cavanal Hill 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 Cavanal Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Cavanal Hill Funds, you can compare the effects of market volatilities on Home Depot and Cavanal Hill 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 Cavanal Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Cavanal Hill.
Diversification Opportunities for Home Depot and Cavanal Hill
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Cavanal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Cavanal Hill Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavanal Hill Funds 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 Cavanal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavanal Hill Funds has no effect on the direction of Home Depot i.e., Home Depot and Cavanal Hill go up and down completely randomly.
Pair Corralation between Home Depot and Cavanal Hill
If you would invest 39,169 in Home Depot on September 1, 2024 and sell it today you would earn a total of 3,744 from holding Home Depot or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Cavanal Hill Funds
Performance |
| Timeline |
| Home Depot |
| Cavanal Hill Funds |
Home Depot and Cavanal Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Cavanal Hill
The main advantage of trading using opposite Home Depot and Cavanal Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Cavanal Hill 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 Cavanal Hill will offset losses from the drop in Cavanal Hill'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 |
| Cavanal Hill vs. Vanguard Total Stock | Cavanal Hill vs. Vanguard 500 Index | Cavanal Hill vs. Vanguard Total Stock | Cavanal Hill vs. Vanguard Total Stock |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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