Correlation Between Home Depot and Capgemini
Can any of the company-specific risk be diversified away by investing in both Home Depot and Capgemini 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 Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Capgemini SE, you can compare the effects of market volatilities on Home Depot and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Capgemini.
Diversification Opportunities for Home Depot and Capgemini
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Capgemini is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Home Depot i.e., Home Depot and Capgemini go up and down completely randomly.
Pair Corralation between Home Depot and Capgemini
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.54 times more return on investment than Capgemini. However, Home Depot is 1.87 times less risky than Capgemini. It trades about 0.17 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.07 per unit of risk. If you would invest 32,655 in Home Depot on September 3, 2024 and sell it today you would earn a total of 10,041 from holding Home Depot or generate 30.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Capgemini SE
Performance |
| Timeline |
| Home Depot |
| Capgemini SE |
Home Depot and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Capgemini
The main advantage of trading using opposite Home Depot and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Home Depot vs. Partner Communications | Home Depot vs. Merck Company | Home Depot vs. Western Midstream Partners | Home Depot vs. Edgewise Therapeutics |
| Capgemini vs. CSE Global Limited | Capgemini vs. Deveron Corp | Capgemini vs. Appen Limited | Capgemini vs. Appen Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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