Correlation Between Home Depot and NewHold Investment
Can any of the company-specific risk be diversified away by investing in both Home Depot and NewHold Investment 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 NewHold Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and NewHold Investment Corp, you can compare the effects of market volatilities on Home Depot and NewHold Investment 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 NewHold Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and NewHold Investment.
Diversification Opportunities for Home Depot and NewHold Investment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and NewHold is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and NewHold Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewHold Investment Corp 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 NewHold Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewHold Investment Corp has no effect on the direction of Home Depot i.e., Home Depot and NewHold Investment go up and down completely randomly.
Pair Corralation between Home Depot and NewHold Investment
If you would invest 32,446 in Home Depot on August 26, 2024 and sell it today you would earn a total of 9,554 from holding Home Depot or generate 29.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Home Depot vs. NewHold Investment Corp
Performance |
| Timeline |
| Home Depot |
| NewHold Investment Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and NewHold Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and NewHold Investment
The main advantage of trading using opposite Home Depot and NewHold Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, NewHold Investment 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 NewHold Investment will offset losses from the drop in NewHold Investment's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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