Correlation Between Home Depot and SHP ETF
Can any of the company-specific risk be diversified away by investing in both Home Depot and SHP 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 SHP 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 SHP ETF Trust, you can compare the effects of market volatilities on Home Depot and SHP 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 SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and SHP ETF.
Diversification Opportunities for Home Depot and SHP ETF
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and SHP is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP 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 SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Home Depot i.e., Home Depot and SHP ETF go up and down completely randomly.
Pair Corralation between Home Depot and SHP ETF
Allowing for the 90-day total investment horizon Home Depot is expected to generate 4.03 times more return on investment than SHP ETF. However, Home Depot is 4.03 times more volatile than SHP ETF Trust. It trades about 0.07 of its potential returns per unit of risk. SHP ETF Trust is currently generating about 0.07 per unit of risk. If you would invest 36,940 in Home Depot on September 1, 2024 and sell it today you would earn a total of 5,973 from holding Home Depot or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Home Depot vs. SHP ETF Trust
Performance |
| Timeline |
| Home Depot |
| SHP ETF Trust |
Home Depot and SHP ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and SHP ETF
The main advantage of trading using opposite Home Depot and SHP ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, SHP 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 SHP ETF will offset losses from the drop in SHP ETF'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 |
| SHP ETF vs. Valued Advisers Trust | SHP ETF vs. Columbia Diversified Fixed | SHP ETF vs. Principal Exchange Traded Funds | SHP ETF vs. Doubleline Etf Trust |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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