Correlation Between Home Depot and Entegris
Can any of the company-specific risk be diversified away by investing in both Home Depot and Entegris 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 Entegris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Entegris, you can compare the effects of market volatilities on Home Depot and Entegris 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 Entegris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Entegris.
Diversification Opportunities for Home Depot and Entegris
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Entegris is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Home Depot i.e., Home Depot and Entegris go up and down completely randomly.
Pair Corralation between Home Depot and Entegris
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.57 times more return on investment than Entegris. However, Home Depot is 1.77 times less risky than Entegris. It trades about 0.26 of its potential returns per unit of risk. Entegris is currently generating about -0.05 per unit of risk. If you would invest 39,300 in Home Depot on August 30, 2024 and sell it today you would earn a total of 3,419 from holding Home Depot or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Entegris
Performance |
| Timeline |
| Home Depot |
| Entegris |
Home Depot and Entegris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Entegris
The main advantage of trading using opposite Home Depot and Entegris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Entegris 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 Entegris will offset losses from the drop in Entegris' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Entegris vs. Teradyne | Entegris vs. Ichor Holdings | Entegris vs. Amtech Systems | Entegris vs. Veeco Instruments |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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