Correlation Between Home Depot and Sodexo PK
Can any of the company-specific risk be diversified away by investing in both Home Depot and Sodexo PK 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 Sodexo PK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Sodexo PK, you can compare the effects of market volatilities on Home Depot and Sodexo PK 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 Sodexo PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Sodexo PK.
Diversification Opportunities for Home Depot and Sodexo PK
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Sodexo is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK 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 Sodexo PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo PK has no effect on the direction of Home Depot i.e., Home Depot and Sodexo PK go up and down completely randomly.
Pair Corralation between Home Depot and Sodexo PK
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.34 times more return on investment than Sodexo PK. However, Home Depot is 1.34 times more volatile than Sodexo PK. It trades about 0.19 of its potential returns per unit of risk. Sodexo PK is currently generating about -0.16 per unit of risk. If you would invest 40,289 in Home Depot on August 28, 2024 and sell it today you would earn a total of 2,578 from holding Home Depot or generate 6.4% 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. Sodexo PK
Performance |
| Timeline |
| Home Depot |
| Sodexo PK |
Home Depot and Sodexo PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Sodexo PK
The main advantage of trading using opposite Home Depot and Sodexo PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Sodexo PK 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 Sodexo PK will offset losses from the drop in Sodexo PK's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| Sodexo PK vs. FitLife Brands, Common | Sodexo PK vs. HUMANA INC | Sodexo PK vs. SCOR PK | Sodexo PK vs. Aquagold International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |