Correlation Between Home Depot and Soho House
Can any of the company-specific risk be diversified away by investing in both Home Depot and Soho House 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 Soho House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Soho House Co, you can compare the effects of market volatilities on Home Depot and Soho House 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 Soho House. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Soho House.
Diversification Opportunities for Home Depot and Soho House
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Soho is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House 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 Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of Home Depot i.e., Home Depot and Soho House go up and down completely randomly.
Pair Corralation between Home Depot and Soho House
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.64 times more return on investment than Soho House. However, Home Depot is 1.55 times less risky than Soho House. It trades about 0.2 of its potential returns per unit of risk. Soho House Co is currently generating about -0.18 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 2,663 from holding Home Depot or generate 6.61% 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. Soho House Co
Performance |
| Timeline |
| Home Depot |
| Soho House |
Home Depot and Soho House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Soho House
The main advantage of trading using opposite Home Depot and Soho House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Soho House 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 Soho House will offset losses from the drop in Soho House's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| Soho House vs. CenterPoint Energy | Soho House vs. Southwest Gas Holdings | Soho House vs. Willamette Valley Vineyards | Soho House vs. Scandinavian Tobacco Group |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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