Correlation Between Home Depot and Sigma Labs
Can any of the company-specific risk be diversified away by investing in both Home Depot and Sigma Labs 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 Sigma Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Sigma Labs, you can compare the effects of market volatilities on Home Depot and Sigma Labs 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 Sigma Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Sigma Labs.
Diversification Opportunities for Home Depot and Sigma Labs
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Sigma is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Sigma Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Labs 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 Sigma Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Labs has no effect on the direction of Home Depot i.e., Home Depot and Sigma Labs go up and down completely randomly.
Pair Corralation between Home Depot and Sigma Labs
If you would invest 39,964 in Home Depot on August 24, 2024 and sell it today you would earn a total of 1,081 from holding Home Depot or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Home Depot vs. Sigma Labs
Performance |
| Timeline |
| Home Depot |
| Sigma Labs |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Sigma Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Sigma Labs
The main advantage of trading using opposite Home Depot and Sigma Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Sigma Labs 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 Sigma Labs will offset losses from the drop in Sigma Labs' long position.| Home Depot vs. Live Ventures | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes Companies | Home Depot vs. Tile Shop Holdings |
| Sigma Labs vs. Flint Telecom Group | Sigma Labs vs. Castellum | Sigma Labs vs. Datametrex AI Limited | Sigma Labs vs. TTEC Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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