Correlation Between Home Depot and Overstockcom
Can any of the company-specific risk be diversified away by investing in both Home Depot and Overstockcom 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 Overstockcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Overstockcom, you can compare the effects of market volatilities on Home Depot and Overstockcom 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 Overstockcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Overstockcom.
Diversification Opportunities for Home Depot and Overstockcom
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Overstockcom is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Overstockcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overstockcom 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 Overstockcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overstockcom has no effect on the direction of Home Depot i.e., Home Depot and Overstockcom go up and down completely randomly.
Pair Corralation between Home Depot and Overstockcom
If you would invest 39,514 in Home Depot on October 26, 2024 and sell it today you would earn a total of 1,496 from holding Home Depot or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.56% |
| Values | Daily Returns |
Home Depot vs. Overstockcom
Performance |
| Timeline |
| Home Depot |
| Overstockcom |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Overstockcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Overstockcom
The main advantage of trading using opposite Home Depot and Overstockcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Overstockcom 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 Overstockcom will offset losses from the drop in Overstockcom'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 |
| Overstockcom vs. Etsy Inc | Overstockcom vs. Chewy Inc | Overstockcom vs. PDD Holdings | Overstockcom vs. Sea |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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