Correlation Between Home Depot and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both Home Depot and Barclays 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 Barclays 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 Barclays Capital, you can compare the effects of market volatilities on Home Depot and Barclays 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Barclays Capital.
Diversification Opportunities for Home Depot and Barclays Capital
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Barclays is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Home Depot i.e., Home Depot and Barclays Capital go up and down completely randomly.
Pair Corralation between Home Depot and Barclays Capital
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.71 times more return on investment than Barclays Capital. However, Home Depot is 1.41 times less risky than Barclays Capital. It trades about 0.06 of its potential returns per unit of risk. Barclays Capital is currently generating about 0.01 per unit of risk. If you would invest 30,306 in Home Depot on August 27, 2024 and sell it today you would earn a total of 11,694 from holding Home Depot or generate 38.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.05% |
| Values | Daily Returns |
Home Depot vs. Barclays Capital
Performance |
| Timeline |
| Home Depot |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Barclays Capital
The main advantage of trading using opposite Home Depot and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Barclays 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.The idea behind Home Depot and Barclays Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Barclays Capital vs. Blackrock Muniholdings Ny | Barclays Capital vs. MFS Investment Grade | Barclays Capital vs. Eaton Vance National | Barclays Capital vs. Invesco High Income |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |