Correlation Between Home Depot and ProShares Short
Can any of the company-specific risk be diversified away by investing in both Home Depot and ProShares Short 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 ProShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and ProShares Short Financials, you can compare the effects of market volatilities on Home Depot and ProShares Short 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 ProShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and ProShares Short.
Diversification Opportunities for Home Depot and ProShares Short
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and ProShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ProShares Short Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Short Fina 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 ProShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Short Fina has no effect on the direction of Home Depot i.e., Home Depot and ProShares Short go up and down completely randomly.
Pair Corralation between Home Depot and ProShares Short
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.39 times more return on investment than ProShares Short. However, Home Depot is 1.39 times more volatile than ProShares Short Financials. It trades about 0.22 of its potential returns per unit of risk. ProShares Short Financials is currently generating about -0.3 per unit of risk. If you would invest 38,846 in Home Depot on November 3, 2024 and sell it today you would earn a total of 2,352 from holding Home Depot or generate 6.05% 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. ProShares Short Financials
Performance |
| Timeline |
| Home Depot |
| ProShares Short Fina |
Home Depot and ProShares Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and ProShares Short
The main advantage of trading using opposite Home Depot and ProShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, ProShares Short 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 ProShares Short will offset losses from the drop in ProShares Short'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 |
| ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares Short MSCI | ProShares Short vs. ProShares Short SmallCap600 | ProShares Short vs. ProShares Short MidCap400 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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