Correlation Between Home Depot and Shawcor
Can any of the company-specific risk be diversified away by investing in both Home Depot and Shawcor 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 Shawcor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Shawcor, you can compare the effects of market volatilities on Home Depot and Shawcor 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 Shawcor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Shawcor.
Diversification Opportunities for Home Depot and Shawcor
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Shawcor is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Shawcor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shawcor 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 Shawcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shawcor has no effect on the direction of Home Depot i.e., Home Depot and Shawcor go up and down completely randomly.
Pair Corralation between Home Depot and Shawcor
If you would invest 39,350 in Home Depot on September 4, 2024 and sell it today you would earn a total of 3,346 from holding Home Depot or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Home Depot vs. Shawcor
Performance |
| Timeline |
| Home Depot |
| Shawcor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and Shawcor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Shawcor
The main advantage of trading using opposite Home Depot and Shawcor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Shawcor 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 Shawcor will offset losses from the drop in Shawcor's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
| Shawcor vs. STEP Energy Services | Shawcor vs. Total Energy Services | Shawcor vs. Trican Well Service | Shawcor vs. High Arctic Energy |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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