Correlation Between Home Depot and HDFC Bank
Can any of the company-specific risk be diversified away by investing in both Home Depot and HDFC Bank 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 HDFC Bank 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 HDFC Bank Limited, you can compare the effects of market volatilities on Home Depot and HDFC Bank 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 HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and HDFC Bank.
Diversification Opportunities for Home Depot and HDFC Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and HDFC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited 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 HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of Home Depot i.e., Home Depot and HDFC Bank go up and down completely randomly.
Pair Corralation between Home Depot and HDFC Bank
Assuming the 90 days trading horizon The Home Depot is expected to generate 0.92 times more return on investment than HDFC Bank. However, The Home Depot is 1.09 times less risky than HDFC Bank. It trades about 0.03 of its potential returns per unit of risk. HDFC Bank Limited is currently generating about -0.35 per unit of risk. If you would invest 8,477 in The Home Depot on November 5, 2024 and sell it today you would earn a total of 50.00 from holding The Home Depot or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. HDFC Bank Limited
Performance |
| Timeline |
| Home Depot |
| HDFC Bank Limited |
Home Depot and HDFC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and HDFC Bank
The main advantage of trading using opposite Home Depot and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, HDFC Bank 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 HDFC Bank will offset losses from the drop in HDFC Bank's long position.| Home Depot vs. METISA Metalrgica Timboense | Home Depot vs. Metalurgica Gerdau SA | Home Depot vs. Tres Tentos Agroindustrial | Home Depot vs. JB Hunt Transport |
| HDFC Bank vs. TechnipFMC plc | HDFC Bank vs. Cognizant Technology Solutions | HDFC Bank vs. Unity Software | HDFC Bank vs. Eastman Chemical |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Transaction History View history of all your transactions and understand their impact on performance |