Correlation Between Home Depot and PIMCO ETF
Can any of the company-specific risk be diversified away by investing in both Home Depot and PIMCO ETF 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 PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and PIMCO ETF Trust, you can compare the effects of market volatilities on Home Depot and PIMCO ETF 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 PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and PIMCO ETF.
Diversification Opportunities for Home Depot and PIMCO ETF
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and PIMCO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust 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 PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of Home Depot i.e., Home Depot and PIMCO ETF go up and down completely randomly.
Pair Corralation between Home Depot and PIMCO ETF
Allowing for the 90-day total investment horizon Home Depot is expected to generate 98.53 times more return on investment than PIMCO ETF. However, Home Depot is 98.53 times more volatile than PIMCO ETF Trust. It trades about 0.15 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 1.39 per unit of risk. If you would invest 40,615 in Home Depot on September 12, 2024 and sell it today you would earn a total of 1,644 from holding Home Depot or generate 4.05% 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. PIMCO ETF Trust
Performance |
| Timeline |
| Home Depot |
| PIMCO ETF Trust |
Home Depot and PIMCO ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and PIMCO ETF
The main advantage of trading using opposite Home Depot and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, PIMCO ETF 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 PIMCO ETF will offset losses from the drop in PIMCO ETF's long position.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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