Correlation Between Home Depot and Gentex
Can any of the company-specific risk be diversified away by investing in both Home Depot and Gentex 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 Gentex 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 Gentex, you can compare the effects of market volatilities on Home Depot and Gentex 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 Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Gentex.
Diversification Opportunities for Home Depot and Gentex
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Gentex is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Home Depot i.e., Home Depot and Gentex go up and down completely randomly.
Pair Corralation between Home Depot and Gentex
Assuming the 90 days trading horizon The Home Depot is expected to generate 1.32 times more return on investment than Gentex. However, Home Depot is 1.32 times more volatile than Gentex. It trades about -0.34 of its potential returns per unit of risk. Gentex is currently generating about -0.48 per unit of risk. If you would invest 40,570 in The Home Depot on October 11, 2024 and sell it today you would lose (3,085) from holding The Home Depot or give up 7.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
The Home Depot vs. Gentex
Performance |
| Timeline |
| Home Depot |
| Gentex |
Home Depot and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Gentex
The main advantage of trading using opposite Home Depot and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Gentex 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 Gentex will offset losses from the drop in Gentex's long position.| Home Depot vs. CENTURIA OFFICE REIT | Home Depot vs. Corporate Office Properties | Home Depot vs. Playtech plc | Home Depot vs. INTER CARS SA |
| Gentex vs. GBS Software AG | Gentex vs. MOLSON RS BEVERAGE | Gentex vs. CN MODERN DAIRY | Gentex vs. AXWAY SOFTWARE EO |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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