Correlation Between Home Depot and Civitas Resources
Can any of the company-specific risk be diversified away by investing in both Home Depot and Civitas Resources 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 Civitas Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Civitas Resources, you can compare the effects of market volatilities on Home Depot and Civitas Resources 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 Civitas Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Civitas Resources.
Diversification Opportunities for Home Depot and Civitas Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Civitas is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Civitas Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civitas Resources 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 Civitas Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civitas Resources has no effect on the direction of Home Depot i.e., Home Depot and Civitas Resources go up and down completely randomly.
Pair Corralation between Home Depot and Civitas Resources
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.1 times more return on investment than Civitas Resources. However, Home Depot is 9.96 times less risky than Civitas Resources. It trades about 0.3 of its potential returns per unit of risk. Civitas Resources is currently generating about -0.08 per unit of risk. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Civitas Resources
Performance |
| Timeline |
| Home Depot |
| Civitas Resources |
Home Depot and Civitas Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Civitas Resources
The main advantage of trading using opposite Home Depot and Civitas Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Civitas Resources 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 Civitas Resources will offset losses from the drop in Civitas Resources' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Civitas Resources vs. Legacy Education | Civitas Resources vs. Apple Inc | Civitas Resources vs. NVIDIA | Civitas Resources vs. Microsoft |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |