Correlation Between Home Depot and JD Sports
Can any of the company-specific risk be diversified away by investing in both Home Depot and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and JD Sports Fashion, you can compare the effects of market volatilities on Home Depot and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and JD Sports.
Diversification Opportunities for Home Depot and JD Sports
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and JDSPY is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Home Depot i.e., Home Depot and JD Sports go up and down completely randomly.
Pair Corralation between Home Depot and JD Sports
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.28 times more return on investment than JD Sports. However, Home Depot is 3.63 times less risky than JD Sports. It trades about 0.17 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.11 per unit of risk. If you would invest 37,247 in Home Depot on September 12, 2024 and sell it today you would earn a total of 4,891 from holding Home Depot or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Home Depot vs. JD Sports Fashion
Performance |
| Timeline |
| Home Depot |
| JD Sports Fashion |
Home Depot and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and JD Sports
The main advantage of trading using opposite Home Depot and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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