Correlation Between Home Depot and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both Home Depot and Innovator Capital 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 Innovator Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Innovator Capital Management, you can compare the effects of market volatilities on Home Depot and Innovator Capital 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 Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Innovator Capital.
Diversification Opportunities for Home Depot and Innovator Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Innovator is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital 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 Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of Home Depot i.e., Home Depot and Innovator Capital go up and down completely randomly.
Pair Corralation between Home Depot and Innovator Capital
If you would invest 29,012 in Home Depot on September 4, 2024 and sell it today you would earn a total of 13,684 from holding Home Depot or generate 47.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.34% |
| Values | Daily Returns |
Home Depot vs. Innovator Capital Management
Performance |
| Timeline |
| Home Depot |
| Innovator Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Innovator Capital
The main advantage of trading using opposite Home Depot and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Innovator Capital 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 Innovator Capital will offset losses from the drop in Innovator Capital's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
| Innovator Capital vs. Vanguard Total Stock | Innovator Capital vs. SPDR SP 500 | Innovator Capital vs. iShares Core SP | Innovator Capital vs. Vanguard Dividend Appreciation |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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