Correlation Between Home Depot and WICKES GROUP
Can any of the company-specific risk be diversified away by investing in both Home Depot and WICKES GROUP 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 WICKES GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and WICKES GROUP PLC, you can compare the effects of market volatilities on Home Depot and WICKES GROUP 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 WICKES GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and WICKES GROUP.
Diversification Opportunities for Home Depot and WICKES GROUP
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Home and WICKES is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and WICKES GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WICKES GROUP PLC 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 The Home Depot are associated (or correlated) with WICKES GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WICKES GROUP PLC has no effect on the direction of Home Depot i.e., Home Depot and WICKES GROUP go up and down completely randomly.
Pair Corralation between Home Depot and WICKES GROUP
Assuming the 90 days horizon The Home Depot is expected to generate 0.63 times more return on investment than WICKES GROUP. However, The Home Depot is 1.58 times less risky than WICKES GROUP. It trades about 0.06 of its potential returns per unit of risk. WICKES GROUP PLC is currently generating about 0.04 per unit of risk. If you would invest 25,774 in The Home Depot on December 1, 2024 and sell it today you would earn a total of 11,826 from holding The Home Depot or generate 45.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
The Home Depot vs. WICKES GROUP PLC
Performance |
| Timeline |
| Home Depot |
| WICKES GROUP PLC |
Home Depot and WICKES GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and WICKES GROUP
The main advantage of trading using opposite Home Depot and WICKES GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, WICKES GROUP 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 WICKES GROUP will offset losses from the drop in WICKES GROUP's long position.| Home Depot vs. Retail Estates NV | Home Depot vs. PICKN PAY STORES | Home Depot vs. National Retail Properties | Home Depot vs. Burlington Stores |
| WICKES GROUP vs. The Home Depot | WICKES GROUP vs. The Home Depot | WICKES GROUP vs. Floor Decor Holdings | WICKES GROUP vs. LESLIES INC DL |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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