Correlation Between Home Depot and IShares GNMA
Can any of the company-specific risk be diversified away by investing in both Home Depot and IShares GNMA 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 IShares GNMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and iShares GNMA Bond, you can compare the effects of market volatilities on Home Depot and IShares GNMA 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 IShares GNMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and IShares GNMA.
Diversification Opportunities for Home Depot and IShares GNMA
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and IShares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and iShares GNMA Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares GNMA Bond 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 IShares GNMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares GNMA Bond has no effect on the direction of Home Depot i.e., Home Depot and IShares GNMA go up and down completely randomly.
Pair Corralation between Home Depot and IShares GNMA
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.62 times more return on investment than IShares GNMA. However, Home Depot is 3.62 times more volatile than iShares GNMA Bond. It trades about 0.13 of its potential returns per unit of risk. iShares GNMA Bond is currently generating about 0.09 per unit of risk. If you would invest 33,610 in Home Depot on September 3, 2024 and sell it today you would earn a total of 9,303 from holding Home Depot or generate 27.68% 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. iShares GNMA Bond
Performance |
| Timeline |
| Home Depot |
| iShares GNMA Bond |
Home Depot and IShares GNMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and IShares GNMA
The main advantage of trading using opposite Home Depot and IShares GNMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, IShares GNMA 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 IShares GNMA will offset losses from the drop in IShares GNMA's long position.| Home Depot vs. Partner Communications | Home Depot vs. Merck Company | Home Depot vs. Western Midstream Partners | Home Depot vs. Edgewise Therapeutics |
| IShares GNMA vs. iShares Agency Bond | IShares GNMA vs. iShares 1 3 Year | IShares GNMA vs. iShares Core 1 5 | IShares GNMA vs. iShares Core 10 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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