Correlation Between Home Depot and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Home Depot and Xinjiang Goldwind 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 Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Home Depot and Xinjiang Goldwind 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 Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Xinjiang Goldwind.
Diversification Opportunities for Home Depot and Xinjiang Goldwind
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Xinjiang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science 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 Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Home Depot i.e., Home Depot and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Home Depot and Xinjiang Goldwind
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.62 times more return on investment than Xinjiang Goldwind. However, Home Depot is 1.61 times less risky than Xinjiang Goldwind. It trades about 0.3 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about -0.09 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 | 100.0% |
| Values | Daily Returns |
Home Depot vs. Xinjiang Goldwind Science
Performance |
| Timeline |
| Home Depot |
| Xinjiang Goldwind Science |
Home Depot and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Xinjiang Goldwind
The main advantage of trading using opposite Home Depot and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind'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 |
| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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