Correlation Between Home Depot and Gabelli Asset
Can any of the company-specific risk be diversified away by investing in both Home Depot and Gabelli Asset 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 Gabelli Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and The Gabelli Asset, you can compare the effects of market volatilities on Home Depot and Gabelli Asset 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 Gabelli Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Gabelli Asset.
Diversification Opportunities for Home Depot and Gabelli Asset
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Gabelli is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and The Gabelli Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Asset 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 Gabelli Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Asset has no effect on the direction of Home Depot i.e., Home Depot and Gabelli Asset go up and down completely randomly.
Pair Corralation between Home Depot and Gabelli Asset
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.48 times more return on investment than Gabelli Asset. However, Home Depot is 1.48 times more volatile than The Gabelli Asset. It trades about 0.09 of its potential returns per unit of risk. The Gabelli Asset is currently generating about 0.05 per unit of risk. If you would invest 32,341 in Home Depot on September 4, 2024 and sell it today you would earn a total of 10,355 from holding Home Depot or generate 32.02% 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. The Gabelli Asset
Performance |
| Timeline |
| Home Depot |
| Gabelli Asset |
Home Depot and Gabelli Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Gabelli Asset
The main advantage of trading using opposite Home Depot and Gabelli Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Gabelli Asset 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 Gabelli Asset will offset losses from the drop in Gabelli Asset's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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