Correlation Between Home Depot and Howden Joinery
Can any of the company-specific risk be diversified away by investing in both Home Depot and Howden Joinery 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 Howden Joinery 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 Howden Joinery Group, you can compare the effects of market volatilities on Home Depot and Howden Joinery 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 Howden Joinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Howden Joinery.
Diversification Opportunities for Home Depot and Howden Joinery
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Home and Howden is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Howden Joinery Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howden Joinery Group 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 Howden Joinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howden Joinery Group has no effect on the direction of Home Depot i.e., Home Depot and Howden Joinery go up and down completely randomly.
Pair Corralation between Home Depot and Howden Joinery
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.77 times more return on investment than Howden Joinery. However, The Home Depot is 1.3 times less risky than Howden Joinery. It trades about 0.06 of its potential returns per unit of risk. Howden Joinery Group is currently generating about 0.04 per unit of risk. If you would invest 28,230 in The Home Depot on November 4, 2024 and sell it today you would earn a total of 11,510 from holding The Home Depot or generate 40.77% 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. Howden Joinery Group
Performance |
| Timeline |
| Home Depot |
| Howden Joinery Group |
Home Depot and Howden Joinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Howden Joinery
The main advantage of trading using opposite Home Depot and Howden Joinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Howden Joinery 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 Howden Joinery will offset losses from the drop in Howden Joinery's long position.| Home Depot vs. Bio Techne Corp | Home Depot vs. Playtech plc | Home Depot vs. UNIVMUSIC GRPADR050 | Home Depot vs. Easy Software AG |
| Howden Joinery vs. MAVEN WIRELESS SWEDEN | Howden Joinery vs. PEPTONIC MEDICAL | Howden Joinery vs. CARSALESCOM | Howden Joinery vs. Peijia Medical Limited |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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