Correlation Between Home Depot and Corning Incorporated
Can any of the company-specific risk be diversified away by investing in both Home Depot and Corning Incorporated 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 Corning Incorporated 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 Corning Incorporated, you can compare the effects of market volatilities on Home Depot and Corning Incorporated 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 Corning Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Corning Incorporated.
Diversification Opportunities for Home Depot and Corning Incorporated
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Home and Corning is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Home Depot i.e., Home Depot and Corning Incorporated go up and down completely randomly.
Pair Corralation between Home Depot and Corning Incorporated
Assuming the 90 days trading horizon Home Depot is expected to generate 1.63 times less return on investment than Corning Incorporated. But when comparing it to its historical volatility, The Home Depot is 1.33 times less risky than Corning Incorporated. It trades about 0.06 of its potential returns per unit of risk. Corning Incorporated is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,042 in Corning Incorporated on October 25, 2024 and sell it today you would earn a total of 1,923 from holding Corning Incorporated or generate 63.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Corning Incorporated
Performance |
| Timeline |
| Home Depot |
| Corning Incorporated |
Home Depot and Corning Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Corning Incorporated
The main advantage of trading using opposite Home Depot and Corning Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Corning Incorporated 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 Corning Incorporated will offset losses from the drop in Corning Incorporated's long position.| Home Depot vs. Haverty Furniture Companies | Home Depot vs. Beazer Homes USA | Home Depot vs. Focus Home Interactive | Home Depot vs. Autohome ADR |
| Corning Incorporated vs. OFFICE DEPOT | Corning Incorporated vs. Infrastrutture Wireless Italiane | Corning Incorporated vs. ADDUS HOMECARE | Corning Incorporated vs. Autohome ADR |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |