Correlation Between Home Depot and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Home Depot and Tidal Trust 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 Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Tidal Trust III, you can compare the effects of market volatilities on Home Depot and Tidal Trust 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 Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Tidal Trust.
Diversification Opportunities for Home Depot and Tidal Trust
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Tidal is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Tidal Trust III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust III 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 Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust III has no effect on the direction of Home Depot i.e., Home Depot and Tidal Trust go up and down completely randomly.
Pair Corralation between Home Depot and Tidal Trust
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.61 times more return on investment than Tidal Trust. However, Home Depot is 3.61 times more volatile than Tidal Trust III. It trades about 0.07 of its potential returns per unit of risk. Tidal Trust III is currently generating about 0.15 per unit of risk. If you would invest 36,940 in Home Depot on September 1, 2024 and sell it today you would earn a total of 5,973 from holding Home Depot or generate 16.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 41.49% |
| Values | Daily Returns |
Home Depot vs. Tidal Trust III
Performance |
| Timeline |
| Home Depot |
| Tidal Trust III |
Home Depot and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Tidal Trust
The main advantage of trading using opposite Home Depot and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Tidal Trust 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 Tidal Trust will offset losses from the drop in Tidal Trust'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 |
| Tidal Trust vs. SSGA Active Trust | Tidal Trust vs. SPDR Nuveen Municipal | Tidal Trust vs. iShares Short Maturity | Tidal Trust vs. First Trust Flexible |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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