Correlation Between Home Depot and LOWES
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By analyzing existing cross correlation between Home Depot and LOWES INC 31, you can compare the effects of market volatilities on Home Depot and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and LOWES.
Diversification Opportunities for Home Depot and LOWES
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and LOWES is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and LOWES INC 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 31 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 31 has no effect on the direction of Home Depot i.e., Home Depot and LOWES go up and down completely randomly.
Pair Corralation between Home Depot and LOWES
Allowing for the 90-day total investment horizon Home Depot is expected to generate 2.95 times more return on investment than LOWES. However, Home Depot is 2.95 times more volatile than LOWES INC 31. It trades about 0.06 of its potential returns per unit of risk. LOWES INC 31 is currently generating about 0.0 per unit of risk. If you would invest 31,111 in Home Depot on September 5, 2024 and sell it today you would earn a total of 11,824 from holding Home Depot or generate 38.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Home Depot vs. LOWES INC 31
Performance |
| Timeline |
| Home Depot |
| LOWES INC 31 |
Home Depot and LOWES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and LOWES
The main advantage of trading using opposite Home Depot and LOWES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, LOWES 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 LOWES will offset losses from the drop in LOWES's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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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