Correlation Between Home Depot and FT Vest
Can any of the company-specific risk be diversified away by investing in both Home Depot and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and FT Vest Equity, you can compare the effects of market volatilities on Home Depot and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and FT Vest.
Diversification Opportunities for Home Depot and FT Vest
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and XMAY is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Home Depot i.e., Home Depot and FT Vest go up and down completely randomly.
Pair Corralation between Home Depot and FT Vest
Allowing for the 90-day total investment horizon Home Depot is expected to generate 3.96 times more return on investment than FT Vest. However, Home Depot is 3.96 times more volatile than FT Vest Equity. It trades about 0.11 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.14 per unit of risk. If you would invest 30,518 in Home Depot on August 25, 2024 and sell it today you would earn a total of 11,482 from holding Home Depot or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 52.8% |
| Values | Daily Returns |
Home Depot vs. FT Vest Equity
Performance |
| Timeline |
| Home Depot |
| FT Vest Equity |
Home Depot and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and FT Vest
The main advantage of trading using opposite Home Depot and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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