Correlation Between Home Depot and BAIDU
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By analyzing existing cross correlation between Home Depot and BAIDU INC 4875, you can compare the effects of market volatilities on Home Depot and BAIDU 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 BAIDU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and BAIDU.
Diversification Opportunities for Home Depot and BAIDU
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and BAIDU is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and BAIDU INC 4875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIDU INC 4875 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 BAIDU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIDU INC 4875 has no effect on the direction of Home Depot i.e., Home Depot and BAIDU go up and down completely randomly.
Pair Corralation between Home Depot and BAIDU
Allowing for the 90-day total investment horizon Home Depot is expected to generate 5.4 times more return on investment than BAIDU. However, Home Depot is 5.4 times more volatile than BAIDU INC 4875. It trades about 0.3 of its potential returns per unit of risk. BAIDU INC 4875 is currently generating about -0.22 per unit of risk. If you would invest 39,169 in Home Depot on September 1, 2024 and sell it today you would earn a total of 3,744 from holding Home Depot or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 28.57% |
| Values | Daily Returns |
Home Depot vs. BAIDU INC 4875
Performance |
| Timeline |
| Home Depot |
| BAIDU INC 4875 |
Home Depot and BAIDU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and BAIDU
The main advantage of trading using opposite Home Depot and BAIDU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, BAIDU 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 BAIDU will offset losses from the drop in BAIDU'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 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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