Correlation Between Home Depot and Erasca
Can any of the company-specific risk be diversified away by investing in both Home Depot and Erasca 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 Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Erasca Inc, you can compare the effects of market volatilities on Home Depot and Erasca 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 Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Erasca.
Diversification Opportunities for Home Depot and Erasca
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Erasca is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc 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 Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Home Depot i.e., Home Depot and Erasca go up and down completely randomly.
Pair Corralation between Home Depot and Erasca
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.28 times more return on investment than Erasca. However, Home Depot is 3.55 times less risky than Erasca. It trades about 0.09 of its potential returns per unit of risk. Erasca Inc is currently generating about 0.02 per unit of risk. If you would invest 29,008 in Home Depot on August 31, 2024 and sell it today you would earn a total of 13,905 from holding Home Depot or generate 47.94% 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. Erasca Inc
Performance |
| Timeline |
| Home Depot |
| Erasca Inc |
Home Depot and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Erasca
The main advantage of trading using opposite Home Depot and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| Home Depot vs. RLJ Lodging Trust | Home Depot vs. Aquagold International | Home Depot vs. Stepstone Group | Home Depot vs. Morningstar Unconstrained Allocation |
| Erasca vs. Cue Biopharma | Erasca vs. Eliem Therapeutics | Erasca vs. Inhibrx | Erasca vs. Molecular Partners AG |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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