Correlation Between Home Depot and NIP Group
Can any of the company-specific risk be diversified away by investing in both Home Depot and NIP Group 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 NIP Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and NIP Group American, you can compare the effects of market volatilities on Home Depot and NIP Group 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 NIP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and NIP Group.
Diversification Opportunities for Home Depot and NIP Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and NIP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and NIP Group American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIP Group American 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 NIP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIP Group American has no effect on the direction of Home Depot i.e., Home Depot and NIP Group go up and down completely randomly.
Pair Corralation between Home Depot and NIP Group
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.13 times more return on investment than NIP Group. However, Home Depot is 7.83 times less risky than NIP Group. It trades about 0.18 of its potential returns per unit of risk. NIP Group American is currently generating about 0.0 per unit of risk. If you would invest 32,457 in Home Depot on September 2, 2024 and sell it today you would earn a total of 10,456 from holding Home Depot or generate 32.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.43% |
| Values | Daily Returns |
Home Depot vs. NIP Group American
Performance |
| Timeline |
| Home Depot |
| NIP Group American |
Home Depot and NIP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and NIP Group
The main advantage of trading using opposite Home Depot and NIP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, NIP Group 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 NIP Group will offset losses from the drop in NIP Group'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 |
| NIP Group vs. Vera Bradley | NIP Group vs. Nike Inc | NIP Group vs. JD Sports Fashion | NIP Group vs. Burlington Stores |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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