Correlation Between Home Depot and USCF ETF
Can any of the company-specific risk be diversified away by investing in both Home Depot and USCF ETF 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 USCF ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and USCF ETF Trust, you can compare the effects of market volatilities on Home Depot and USCF ETF 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 USCF ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and USCF ETF.
Diversification Opportunities for Home Depot and USCF ETF
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and USCF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and USCF ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF ETF Trust 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 USCF ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF ETF Trust has no effect on the direction of Home Depot i.e., Home Depot and USCF ETF go up and down completely randomly.
Pair Corralation between Home Depot and USCF ETF
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.76 times more return on investment than USCF ETF. However, Home Depot is 1.76 times more volatile than USCF ETF Trust. It trades about 0.09 of its potential returns per unit of risk. USCF ETF Trust is currently generating about 0.12 per unit of risk. If you would invest 32,432 in Home Depot on November 28, 2024 and sell it today you would earn a total of 6,897 from holding Home Depot or generate 21.27% 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. USCF ETF Trust
Performance |
| Timeline |
| Home Depot |
| USCF ETF Trust |
Home Depot and USCF ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and USCF ETF
The main advantage of trading using opposite Home Depot and USCF ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, USCF ETF 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 USCF ETF will offset losses from the drop in USCF ETF'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 |
| USCF ETF vs. Strategy Shares | USCF ETF vs. Freedom Day Dividend | USCF ETF vs. Franklin Templeton ETF | USCF ETF vs. iShares MSCI China |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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