Correlation Between Home Depot and Thrivent Natural
Can any of the company-specific risk be diversified away by investing in both Home Depot and Thrivent Natural 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 Thrivent Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Thrivent Natural Resources, you can compare the effects of market volatilities on Home Depot and Thrivent Natural 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 Thrivent Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Thrivent Natural.
Diversification Opportunities for Home Depot and Thrivent Natural
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Thrivent is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Thrivent Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Natural Res 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 Thrivent Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Natural Res has no effect on the direction of Home Depot i.e., Home Depot and Thrivent Natural go up and down completely randomly.
Pair Corralation between Home Depot and Thrivent Natural
Allowing for the 90-day total investment horizon Home Depot is expected to generate 15.88 times more return on investment than Thrivent Natural. However, Home Depot is 15.88 times more volatile than Thrivent Natural Resources. It trades about 0.08 of its potential returns per unit of risk. Thrivent Natural Resources is currently generating about 0.3 per unit of risk. If you would invest 31,221 in Home Depot on September 12, 2024 and sell it today you would earn a total of 11,170 from holding Home Depot or generate 35.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
Home Depot vs. Thrivent Natural Resources
Performance |
| Timeline |
| Home Depot |
| Thrivent Natural Res |
Home Depot and Thrivent Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Thrivent Natural
The main advantage of trading using opposite Home Depot and Thrivent Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Thrivent Natural 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 Thrivent Natural will offset losses from the drop in Thrivent Natural's long position.| Home Depot vs. Victory Integrity Smallmid Cap | Home Depot vs. Hilton Worldwide Holdings | Home Depot vs. NVIDIA | Home Depot vs. JPMorgan Chase Co |
| Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard 500 Index | Thrivent Natural vs. Vanguard Total Stock | Thrivent Natural vs. Vanguard Total Stock |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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