Correlation Between Home Depot and Income Fund
Can any of the company-specific risk be diversified away by investing in both Home Depot and Income Fund 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 Income Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Income Fund Institutional, you can compare the effects of market volatilities on Home Depot and Income Fund 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 Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Income Fund.
Diversification Opportunities for Home Depot and Income Fund
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and INCOME is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Income Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund Institutional 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Institutional has no effect on the direction of Home Depot i.e., Home Depot and Income Fund go up and down completely randomly.
Pair Corralation between Home Depot and Income Fund
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.48 times more return on investment than Income Fund. However, Home Depot is 3.48 times more volatile than Income Fund Institutional. It trades about 0.12 of its potential returns per unit of risk. Income Fund Institutional is currently generating about 0.09 per unit of risk. If you would invest 28,561 in Home Depot on September 1, 2024 and sell it today you would earn a total of 14,352 from holding Home Depot or generate 50.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Income Fund Institutional
Performance |
| Timeline |
| Home Depot |
| Income Fund Institutional |
Home Depot and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Income Fund
The main advantage of trading using opposite Home Depot and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Income Fund vs. Great West Goldman Sachs | Income Fund vs. Oppenheimer Gold Special | Income Fund vs. International Investors Gold | Income Fund vs. International Investors Gold |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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