Correlation Between Home Depot and WisdomTree CBOE
Can any of the company-specific risk be diversified away by investing in both Home Depot and WisdomTree CBOE 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 WisdomTree CBOE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and WisdomTree CBOE SP, you can compare the effects of market volatilities on Home Depot and WisdomTree CBOE 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 WisdomTree CBOE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and WisdomTree CBOE.
Diversification Opportunities for Home Depot and WisdomTree CBOE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and WisdomTree is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and WisdomTree CBOE SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree CBOE SP 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 WisdomTree CBOE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree CBOE SP has no effect on the direction of Home Depot i.e., Home Depot and WisdomTree CBOE go up and down completely randomly.
Pair Corralation between Home Depot and WisdomTree CBOE
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.26 times more return on investment than WisdomTree CBOE. However, Home Depot is 2.26 times more volatile than WisdomTree CBOE SP. It trades about 0.06 of its potential returns per unit of risk. WisdomTree CBOE SP is currently generating about 0.11 per unit of risk. If you would invest 30,557 in Home Depot on August 24, 2024 and sell it today you would earn a total of 11,443 from holding Home Depot or generate 37.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. WisdomTree CBOE SP
Performance |
| Timeline |
| Home Depot |
| WisdomTree CBOE SP |
Home Depot and WisdomTree CBOE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and WisdomTree CBOE
The main advantage of trading using opposite Home Depot and WisdomTree CBOE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, WisdomTree CBOE 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 WisdomTree CBOE will offset losses from the drop in WisdomTree CBOE's long position.| Home Depot vs. Live Ventures | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies | Home Depot vs. Tile Shop Holdings |
| WisdomTree CBOE vs. Global X SP | WisdomTree CBOE vs. Global X Nasdaq | WisdomTree CBOE vs. First Trust BuyWrite | WisdomTree CBOE vs. Amplify CWP Enhanced |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |