Correlation Between Home Depot and Inchcape Plc
Can any of the company-specific risk be diversified away by investing in both Home Depot and Inchcape Plc 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 Inchcape Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Inchcape plc, you can compare the effects of market volatilities on Home Depot and Inchcape Plc 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 Inchcape Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Inchcape Plc.
Diversification Opportunities for Home Depot and Inchcape Plc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Inchcape is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Inchcape plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape plc 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 Inchcape Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape plc has no effect on the direction of Home Depot i.e., Home Depot and Inchcape Plc go up and down completely randomly.
Pair Corralation between Home Depot and Inchcape Plc
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.89 times more return on investment than Inchcape Plc. However, Home Depot is 1.12 times less risky than Inchcape Plc. It trades about 0.18 of its potential returns per unit of risk. Inchcape plc is currently generating about -0.04 per unit of risk. If you would invest 32,432 in Home Depot on September 1, 2024 and sell it today you would earn a total of 10,481 from holding Home Depot or generate 32.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Inchcape plc
Performance |
| Timeline |
| Home Depot |
| Inchcape plc |
Home Depot and Inchcape Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Inchcape Plc
The main advantage of trading using opposite Home Depot and Inchcape Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Inchcape Plc 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 Inchcape Plc will offset losses from the drop in Inchcape Plc'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 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |