Correlation Between Home Depot and Prologis
Can any of the company-specific risk be diversified away by investing in both Home Depot and Prologis 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 Prologis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Prologis, you can compare the effects of market volatilities on Home Depot and Prologis 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 Prologis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Prologis.
Diversification Opportunities for Home Depot and Prologis
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Prologis is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of Home Depot i.e., Home Depot and Prologis go up and down completely randomly.
Pair Corralation between Home Depot and Prologis
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.1 times more return on investment than Prologis. However, Home Depot is 1.1 times more volatile than Prologis. It trades about 0.19 of its potential returns per unit of risk. Prologis is currently generating about 0.01 per unit of risk. If you would invest 40,078 in Home Depot on August 29, 2024 and sell it today you would earn a total of 2,641 from holding Home Depot or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Prologis
Performance |
| Timeline |
| Home Depot |
| Prologis |
Home Depot and Prologis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Prologis
The main advantage of trading using opposite Home Depot and Prologis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Prologis 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 Prologis will offset losses from the drop in Prologis' long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies |
| Prologis vs. Rexford Industrial Realty | Prologis vs. LXP Industrial Trust | Prologis vs. Public Storage | Prologis vs. Rexford Industrial Realty |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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