Correlation Between Home Depot and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Home Depot and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Goldman Sachs ETF, you can compare the effects of market volatilities on Home Depot and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Goldman Sachs.
Diversification Opportunities for Home Depot and Goldman Sachs
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Goldman is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ETF has no effect on the direction of Home Depot i.e., Home Depot and Goldman Sachs go up and down completely randomly.
Pair Corralation between Home Depot and Goldman Sachs
Allowing for the 90-day total investment horizon Home Depot is expected to generate 108.36 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Home Depot is 66.92 times less risky than Goldman Sachs. It trades about 0.05 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Goldman Sachs ETF on November 3, 2024 and sell it today you would earn a total of 5,011 from holding Goldman Sachs ETF or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 53.63% |
| Values | Daily Returns |
Home Depot vs. Goldman Sachs ETF
Performance |
| Timeline |
| Home Depot |
| Goldman Sachs ETF |
Home Depot and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Goldman Sachs
The main advantage of trading using opposite Home Depot and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Goldman Sachs vs. VanEck Vectors Moodys | Goldman Sachs vs. Valued Advisers Trust | Goldman Sachs vs. Xtrackers California Municipal | Goldman Sachs vs. Principal Exchange Traded Funds |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |