Correlation Between Home Depot and LF Capital
Can any of the company-specific risk be diversified away by investing in both Home Depot and LF Capital 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 LF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and LF Capital Acquisition, you can compare the effects of market volatilities on Home Depot and LF Capital 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 LF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and LF Capital.
Diversification Opportunities for Home Depot and LF Capital
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and LFAC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and LF Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Capital Acquisition 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 LF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Capital Acquisition has no effect on the direction of Home Depot i.e., Home Depot and LF Capital go up and down completely randomly.
Pair Corralation between Home Depot and LF Capital
If you would invest 40,520 in Home Depot on August 29, 2024 and sell it today you would earn a total of 2,287 from holding Home Depot or generate 5.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 2.33% |
| Values | Daily Returns |
Home Depot vs. LF Capital Acquisition
Performance |
| Timeline |
| Home Depot |
| LF Capital Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and LF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and LF Capital
The main advantage of trading using opposite Home Depot and LF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, LF Capital 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 LF Capital will offset losses from the drop in LF Capital'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 |
| LF Capital vs. Swiftmerge Acquisition Corp | LF Capital vs. Latamgrowth SPAC Unit | LF Capital vs. TLGY Acquisition Corp | LF Capital vs. Qomolangma Acquisition Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |