Correlation Between Home Depot and HORNBACH Baumarkt
Can any of the company-specific risk be diversified away by investing in both Home Depot and HORNBACH Baumarkt 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 HORNBACH Baumarkt 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 HORNBACH Baumarkt AG, you can compare the effects of market volatilities on Home Depot and HORNBACH Baumarkt 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 HORNBACH Baumarkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and HORNBACH Baumarkt.
Diversification Opportunities for Home Depot and HORNBACH Baumarkt
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and HORNBACH is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and HORNBACH Baumarkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HORNBACH Baumarkt 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 HORNBACH Baumarkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HORNBACH Baumarkt has no effect on the direction of Home Depot i.e., Home Depot and HORNBACH Baumarkt go up and down completely randomly.
Pair Corralation between Home Depot and HORNBACH Baumarkt
Assuming the 90 days horizon The Home Depot is expected to under-perform the HORNBACH Baumarkt. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 1.12 times less risky than HORNBACH Baumarkt. The stock trades about -0.17 of its potential returns per unit of risk. The HORNBACH Baumarkt AG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,250 in HORNBACH Baumarkt AG on December 1, 2024 and sell it today you would earn a total of 100.00 from holding HORNBACH Baumarkt AG or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. HORNBACH Baumarkt AG
Performance |
| Timeline |
| Home Depot |
| HORNBACH Baumarkt |
Home Depot and HORNBACH Baumarkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and HORNBACH Baumarkt
The main advantage of trading using opposite Home Depot and HORNBACH Baumarkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, HORNBACH Baumarkt 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 HORNBACH Baumarkt will offset losses from the drop in HORNBACH Baumarkt'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 |
| HORNBACH Baumarkt vs. LOANDEPOT INC A | HORNBACH Baumarkt vs. SENECA FOODS A | HORNBACH Baumarkt vs. HAPPY BELLY FOOD | HORNBACH Baumarkt vs. US Foods Holding |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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