Correlation Between Home Depot and Series Portfolios
Can any of the company-specific risk be diversified away by investing in both Home Depot and Series Portfolios 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 Series Portfolios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Series Portfolios Trust, you can compare the effects of market volatilities on Home Depot and Series Portfolios 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 Series Portfolios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Series Portfolios.
Diversification Opportunities for Home Depot and Series Portfolios
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Series is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Series Portfolios Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Series Portfolios 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 Series Portfolios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Series Portfolios Trust has no effect on the direction of Home Depot i.e., Home Depot and Series Portfolios go up and down completely randomly.
Pair Corralation between Home Depot and Series Portfolios
Allowing for the 90-day total investment horizon Home Depot is expected to generate 13.24 times more return on investment than Series Portfolios. However, Home Depot is 13.24 times more volatile than Series Portfolios Trust. It trades about 0.17 of its potential returns per unit of risk. Series Portfolios Trust is currently generating about 0.25 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 10,258 from holding Home Depot or generate 31.41% 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. Series Portfolios Trust
Performance |
| Timeline |
| Home Depot |
| Series Portfolios Trust |
Home Depot and Series Portfolios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Series Portfolios
The main advantage of trading using opposite Home Depot and Series Portfolios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Series Portfolios 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 Series Portfolios will offset losses from the drop in Series Portfolios' long position.| Home Depot vs. Partner Communications | Home Depot vs. Merck Company | Home Depot vs. Western Midstream Partners | Home Depot vs. Edgewise Therapeutics |
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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