Correlation Between Home Depot and WELLS
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By analyzing existing cross correlation between Home Depot and WELLS FARGO NEW, you can compare the effects of market volatilities on Home Depot and WELLS 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 WELLS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and WELLS.
Diversification Opportunities for Home Depot and WELLS
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and WELLS is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and WELLS FARGO NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLS FARGO NEW 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 WELLS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLS FARGO NEW has no effect on the direction of Home Depot i.e., Home Depot and WELLS go up and down completely randomly.
Pair Corralation between Home Depot and WELLS
Allowing for the 90-day total investment horizon Home Depot is expected to generate 4.03 times more return on investment than WELLS. However, Home Depot is 4.03 times more volatile than WELLS FARGO NEW. It trades about 0.2 of its potential returns per unit of risk. WELLS FARGO NEW is currently generating about -0.05 per unit of risk. If you would invest 40,289 in Home Depot on August 29, 2024 and sell it today you would earn a total of 2,663 from holding Home Depot or generate 6.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. WELLS FARGO NEW
Performance |
| Timeline |
| Home Depot |
| WELLS FARGO NEW |
Home Depot and WELLS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and WELLS
The main advantage of trading using opposite Home Depot and WELLS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, WELLS 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 WELLS will offset losses from the drop in WELLS's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| WELLS vs. Comstock Holding Companies | WELLS vs. Keurig Dr Pepper | WELLS vs. Primo Brands | WELLS vs. Treasury Wine Estates |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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