Correlation Between Home Depot and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Home Depot and Innovator ETFs 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 ETFs 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 ETFs Trust, you can compare the effects of market volatilities on Home Depot and Innovator ETFs 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 ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Innovator ETFs.
Diversification Opportunities for Home Depot and Innovator ETFs
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Innovator is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Home Depot i.e., Home Depot and Innovator ETFs go up and down completely randomly.
Pair Corralation between Home Depot and Innovator ETFs
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.15 times more return on investment than Innovator ETFs. However, Home Depot is 3.15 times more volatile than Innovator ETFs Trust. It trades about 0.21 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.03 per unit of risk. If you would invest 36,514 in Home Depot on August 29, 2024 and sell it today you would earn a total of 6,205 from holding Home Depot or generate 16.99% 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. Innovator ETFs Trust
Performance |
| Timeline |
| Home Depot |
| Innovator ETFs Trust |
Home Depot and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Innovator ETFs
The main advantage of trading using opposite Home Depot and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Innovator ETFs 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 ETFs will offset losses from the drop in Innovator ETFs' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Innovator ETFs vs. Freedom Day Dividend | Innovator ETFs vs. Franklin Templeton ETF | Innovator ETFs vs. iShares MSCI China | Innovator ETFs vs. Tidal Trust II |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |