Correlation Between Home Depot and Citigroup
Can any of the company-specific risk be diversified away by investing in both Home Depot and Citigroup 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 Citigroup 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 Citigroup, you can compare the effects of market volatilities on Home Depot and Citigroup 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 Citigroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Citigroup.
Diversification Opportunities for Home Depot and Citigroup
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Citigroup is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Citigroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citigroup 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 Citigroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citigroup has no effect on the direction of Home Depot i.e., Home Depot and Citigroup go up and down completely randomly.
Pair Corralation between Home Depot and Citigroup
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.96 times more return on investment than Citigroup. However, The Home Depot is 1.04 times less risky than Citigroup. It trades about 0.18 of its potential returns per unit of risk. Citigroup is currently generating about 0.13 per unit of risk. If you would invest 6,148 in The Home Depot on September 2, 2024 and sell it today you would earn a total of 2,929 from holding The Home Depot or generate 47.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Citigroup
Performance |
| Timeline |
| Home Depot |
| Citigroup |
Home Depot and Citigroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Citigroup
The main advantage of trading using opposite Home Depot and Citigroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Citigroup 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 Citigroup will offset losses from the drop in Citigroup's long position.| Home Depot vs. Fras le SA | Home Depot vs. Western Digital | Home Depot vs. Energisa SA | Home Depot vs. Clave Indices De |
| Citigroup vs. New Oriental Education | Citigroup vs. salesforce inc | Citigroup vs. Tyson Foods | Citigroup vs. Apartment Investment and |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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