Correlation Between Home Depot and Gold
Can any of the company-specific risk be diversified away by investing in both Home Depot and Gold 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 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Gold And Gemstone, you can compare the effects of market volatilities on Home Depot and Gold 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 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Gold.
Diversification Opportunities for Home Depot and Gold
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Gold is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Gold And Gemstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Gemstone 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 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Gemstone has no effect on the direction of Home Depot i.e., Home Depot and Gold go up and down completely randomly.
Pair Corralation between Home Depot and Gold
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.11 times more return on investment than Gold. However, Home Depot is 9.21 times less risky than Gold. It trades about 0.27 of its potential returns per unit of risk. Gold And Gemstone is currently generating about -0.04 per unit of risk. If you would invest 39,245 in Home Depot on October 24, 2024 and sell it today you would earn a total of 1,943 from holding Home Depot or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Home Depot vs. Gold And Gemstone
Performance |
| Timeline |
| Home Depot |
| Gold And Gemstone |
Home Depot and Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Gold
The main advantage of trading using opposite Home Depot and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Gold 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 Gold will offset losses from the drop in Gold'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 |
| Gold vs. Brightrock Gold Corp | Gold vs. Mexus Gold Us | Gold vs. Platinum Group Metals | Gold vs. Buyer Group International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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