Correlation Between Home Depot and Calamos Hedged
Can any of the company-specific risk be diversified away by investing in both Home Depot and Calamos Hedged 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 Calamos Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Calamos Hedged Equity, you can compare the effects of market volatilities on Home Depot and Calamos Hedged 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 Calamos Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Calamos Hedged.
Diversification Opportunities for Home Depot and Calamos Hedged
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Calamos is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Calamos Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos Hedged Equity 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 Calamos Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos Hedged Equity has no effect on the direction of Home Depot i.e., Home Depot and Calamos Hedged go up and down completely randomly.
Pair Corralation between Home Depot and Calamos Hedged
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.23 times more return on investment than Calamos Hedged. However, Home Depot is 3.23 times more volatile than Calamos Hedged Equity. It trades about 0.19 of its potential returns per unit of risk. Calamos Hedged Equity is currently generating about 0.15 per unit of risk. If you would invest 40,289 in Home Depot on August 29, 2024 and sell it today you would earn a total of 2,663 from holding Home Depot or generate 6.61% 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. Calamos Hedged Equity
Performance |
| Timeline |
| Home Depot |
| Calamos Hedged Equity |
Home Depot and Calamos Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Calamos Hedged
The main advantage of trading using opposite Home Depot and Calamos Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Calamos Hedged 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 Calamos Hedged will offset losses from the drop in Calamos Hedged'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 |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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