Correlation Between Home Depot and Listed Funds
Can any of the company-specific risk be diversified away by investing in both Home Depot and Listed Funds 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 Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Listed Funds Trust, you can compare the effects of market volatilities on Home Depot and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Listed Funds.
Diversification Opportunities for Home Depot and Listed Funds
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Listed is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds 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 Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of Home Depot i.e., Home Depot and Listed Funds go up and down completely randomly.
Pair Corralation between Home Depot and Listed Funds
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.07 times more return on investment than Listed Funds. However, Home Depot is 2.07 times more volatile than Listed Funds Trust. It trades about 0.18 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.17 per unit of risk. If you would invest 32,432 in Home Depot on August 31, 2024 and sell it today you would earn a total of 10,481 from holding Home Depot or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Listed Funds Trust
Performance |
| Timeline |
| Home Depot |
| Listed Funds Trust |
Home Depot and Listed Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Listed Funds
The main advantage of trading using opposite Home Depot and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' long position.| Home Depot vs. RLJ Lodging Trust | Home Depot vs. Aquagold International | Home Depot vs. Stepstone Group | Home Depot vs. Morningstar Unconstrained Allocation |
| Listed Funds vs. iShares Core SP | Listed Funds vs. iShares Core MSCI | Listed Funds vs. iShares Broad USD | Listed Funds vs. iShares Core SP |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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