Correlation Between Home Depot and TILT Holdings
Can any of the company-specific risk be diversified away by investing in both Home Depot and TILT Holdings 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 TILT Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and TILT Holdings, you can compare the effects of market volatilities on Home Depot and TILT Holdings 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 TILT Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and TILT Holdings.
Diversification Opportunities for Home Depot and TILT Holdings
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and TILT is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and TILT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TILT Holdings 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 TILT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TILT Holdings has no effect on the direction of Home Depot i.e., Home Depot and TILT Holdings go up and down completely randomly.
Pair Corralation between Home Depot and TILT Holdings
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.13 times more return on investment than TILT Holdings. However, Home Depot is 7.97 times less risky than TILT Holdings. It trades about 0.19 of its potential returns per unit of risk. TILT Holdings is currently generating about -0.11 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 | 95.45% |
| Values | Daily Returns |
Home Depot vs. TILT Holdings
Performance |
| Timeline |
| Home Depot |
| TILT Holdings |
Home Depot and TILT Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and TILT Holdings
The main advantage of trading using opposite Home Depot and TILT Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, TILT Holdings 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 TILT Holdings will offset losses from the drop in TILT Holdings' long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| TILT Holdings vs. Cansortium | TILT Holdings vs. 4Front Ventures Corp | TILT Holdings vs. Medipharm Labs Corp | TILT Holdings vs. Khiron Life Sciences |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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