Correlation Between Home Depot and NOVANT
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By analyzing existing cross correlation between Home Depot and NOVANT 3168 01 NOV 51, you can compare the effects of market volatilities on Home Depot and NOVANT 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 NOVANT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and NOVANT.
Diversification Opportunities for Home Depot and NOVANT
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and NOVANT is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and NOVANT 3168 01 NOV 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVANT 3168 01 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 NOVANT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVANT 3168 01 has no effect on the direction of Home Depot i.e., Home Depot and NOVANT go up and down completely randomly.
Pair Corralation between Home Depot and NOVANT
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.0 times less return on investment than NOVANT. But when comparing it to its historical volatility, Home Depot is 1.02 times less risky than NOVANT. It trades about 0.3 of its potential returns per unit of risk. NOVANT 3168 01 NOV 51 is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 6,816 in NOVANT 3168 01 NOV 51 on September 1, 2024 and sell it today you would earn a total of 304.00 from holding NOVANT 3168 01 NOV 51 or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.62% |
| Values | Daily Returns |
Home Depot vs. NOVANT 3168 01 NOV 51
Performance |
| Timeline |
| Home Depot |
| NOVANT 3168 01 |
Home Depot and NOVANT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and NOVANT
The main advantage of trading using opposite Home Depot and NOVANT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, NOVANT 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 NOVANT will offset losses from the drop in NOVANT'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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