Correlation Between Home Depot and US Global
Can any of the company-specific risk be diversified away by investing in both Home Depot and US Global 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 US Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and US Global Jets, you can compare the effects of market volatilities on Home Depot and US Global 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 US Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and US Global.
Diversification Opportunities for Home Depot and US Global
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and JETS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and US Global Jets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Global Jets 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 US Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Global Jets has no effect on the direction of Home Depot i.e., Home Depot and US Global go up and down completely randomly.
Pair Corralation between Home Depot and US Global
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.82 times more return on investment than US Global. However, Home Depot is 1.22 times less risky than US Global. It trades about 0.07 of its potential returns per unit of risk. US Global Jets is currently generating about 0.04 per unit of risk. If you would invest 28,161 in Home Depot on November 19, 2024 and sell it today you would earn a total of 12,789 from holding Home Depot or generate 45.41% 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. US Global Jets
Performance |
| Timeline |
| Home Depot |
| US Global Jets |
Home Depot and US Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and US Global
The main advantage of trading using opposite Home Depot and US Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, US Global 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 US Global will offset losses from the drop in US Global's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies | Home Depot vs. Kirklands |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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