Correlation Between Home Depot and NEWELL RUBBERMAID
Can any of the company-specific risk be diversified away by investing in both Home Depot and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID 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 NEWELL RUBBERMAID , you can compare the effects of market volatilities on Home Depot and NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and NEWELL RUBBERMAID.
Diversification Opportunities for Home Depot and NEWELL RUBBERMAID
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and NEWELL is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and NEWELL RUBBERMAID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWELL RUBBERMAID 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 NEWELL RUBBERMAID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWELL RUBBERMAID has no effect on the direction of Home Depot i.e., Home Depot and NEWELL RUBBERMAID go up and down completely randomly.
Pair Corralation between Home Depot and NEWELL RUBBERMAID
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.76 times more return on investment than NEWELL RUBBERMAID. However, The Home Depot is 1.31 times less risky than NEWELL RUBBERMAID. It trades about -0.35 of its potential returns per unit of risk. NEWELL RUBBERMAID is currently generating about -0.35 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. NEWELL RUBBERMAID
Performance |
| Timeline |
| Home Depot |
| NEWELL RUBBERMAID |
Home Depot and NEWELL RUBBERMAID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and NEWELL RUBBERMAID
The main advantage of trading using opposite Home Depot and NEWELL RUBBERMAID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, NEWELL RUBBERMAID 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 NEWELL RUBBERMAID will offset losses from the drop in NEWELL RUBBERMAID'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 |
| NEWELL RUBBERMAID vs. CLEAN ENERGY FUELS | NEWELL RUBBERMAID vs. GALENA MINING LTD | NEWELL RUBBERMAID vs. GWILLI FOOD | NEWELL RUBBERMAID vs. Austevoll Seafood ASA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |