Correlation Between Home Depot and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Home Depot and IShares Russell 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 Russell 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 Russell Top, you can compare the effects of market volatilities on Home Depot and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and IShares Russell.
Diversification Opportunities for Home Depot and IShares Russell
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and IShares is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and iShares Russell Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Top 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Top has no effect on the direction of Home Depot i.e., Home Depot and IShares Russell go up and down completely randomly.
Pair Corralation between Home Depot and IShares Russell
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the IShares Russell. In addition to that, Home Depot is 1.63 times more volatile than iShares Russell Top. It trades about -0.15 of its total potential returns per unit of risk. iShares Russell Top is currently generating about -0.11 per unit of volatility. If you would invest 14,957 in iShares Russell Top on December 1, 2024 and sell it today you would lose (290.00) from holding iShares Russell Top or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. iShares Russell Top
Performance |
| Timeline |
| Home Depot |
| iShares Russell Top |
Home Depot and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and IShares Russell
The main advantage of trading using opposite Home Depot and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell'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 |
| IShares Russell vs. iShares Russell Top | IShares Russell vs. iShares Russell Top | IShares Russell vs. iShares MSCI USA | IShares Russell vs. iShares MSCI KLD |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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