Correlation Between Home Depot and Cambria Trinity
Can any of the company-specific risk be diversified away by investing in both Home Depot and Cambria Trinity 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 Cambria Trinity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Cambria Trinity ETF, you can compare the effects of market volatilities on Home Depot and Cambria Trinity 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 Cambria Trinity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Cambria Trinity.
Diversification Opportunities for Home Depot and Cambria Trinity
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Cambria is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Cambria Trinity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Trinity ETF 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 Cambria Trinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Trinity ETF has no effect on the direction of Home Depot i.e., Home Depot and Cambria Trinity go up and down completely randomly.
Pair Corralation between Home Depot and Cambria Trinity
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.23 times more return on investment than Cambria Trinity. However, Home Depot is 2.23 times more volatile than Cambria Trinity ETF. It trades about 0.09 of its potential returns per unit of risk. Cambria Trinity ETF is currently generating about 0.06 per unit of risk. If you would invest 28,986 in Home Depot on September 2, 2024 and sell it today you would earn a total of 13,927 from holding Home Depot or generate 48.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Cambria Trinity ETF
Performance |
| Timeline |
| Home Depot |
| Cambria Trinity ETF |
Home Depot and Cambria Trinity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Cambria Trinity
The main advantage of trading using opposite Home Depot and Cambria Trinity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Cambria Trinity 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 Cambria Trinity will offset losses from the drop in Cambria Trinity'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 |
| Cambria Trinity vs. Cambria Global Asset | Cambria Trinity vs. Cambria Global Momentum | Cambria Trinity vs. Cambria Emerging Shareholder | Cambria Trinity vs. Cambria Value and |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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