Correlation Between Home Depot and Centre Global
Can any of the company-specific risk be diversified away by investing in both Home Depot and Centre Global 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 Centre Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Centre Global Infrastructure, you can compare the effects of market volatilities on Home Depot and Centre Global 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 Centre Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Centre Global.
Diversification Opportunities for Home Depot and Centre Global
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Centre is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Centre Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centre Global Infras 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 Centre Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centre Global Infras has no effect on the direction of Home Depot i.e., Home Depot and Centre Global go up and down completely randomly.
Pair Corralation between Home Depot and Centre Global
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.8 times more return on investment than Centre Global. However, Home Depot is 1.8 times more volatile than Centre Global Infrastructure. It trades about 0.13 of its potential returns per unit of risk. Centre Global Infrastructure is currently generating about -0.05 per unit of risk. If you would invest 40,097 in Home Depot on September 13, 2024 and sell it today you would earn a total of 1,403 from holding Home Depot or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Home Depot vs. Centre Global Infrastructure
Performance |
| Timeline |
| Home Depot |
| Centre Global Infras |
Home Depot and Centre Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Centre Global
The main advantage of trading using opposite Home Depot and Centre Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Centre Global 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 Centre Global will offset losses from the drop in Centre Global's long position.| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
| Centre Global vs. Blackrock Conservative Prprdptfinstttnl | Centre Global vs. Allianzgi Diversified Income | Centre Global vs. Elfun Diversified Fund | Centre Global vs. Stone Ridge Diversified |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |