Correlation Between Kingfisher Plc and Home Depot
Can any of the company-specific risk be diversified away by investing in both Kingfisher Plc and Home Depot 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 Kingfisher Plc and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingfisher plc and Home Depot, you can compare the effects of market volatilities on Kingfisher Plc and Home Depot 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 Kingfisher Plc with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingfisher Plc and Home Depot.
Diversification Opportunities for Kingfisher Plc and Home Depot
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kingfisher and Home is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kingfisher plc and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Kingfisher Plc 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 Kingfisher plc are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Kingfisher Plc i.e., Kingfisher Plc and Home Depot go up and down completely randomly.
Pair Corralation between Kingfisher Plc and Home Depot
Assuming the 90 days horizon Kingfisher plc is expected to generate 3.1 times more return on investment than Home Depot. However, Kingfisher Plc is 3.1 times more volatile than Home Depot. It trades about 0.07 of its potential returns per unit of risk. Home Depot is currently generating about 0.13 per unit of risk. If you would invest 250.00 in Kingfisher plc on August 25, 2024 and sell it today you would earn a total of 130.00 from holding Kingfisher plc or generate 52.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 71.22% |
| Values | Daily Returns |
Kingfisher plc vs. Home Depot
Performance |
| Timeline |
| Kingfisher plc |
| Home Depot |
Kingfisher Plc and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingfisher Plc and Home Depot
The main advantage of trading using opposite Kingfisher Plc and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingfisher Plc position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Kingfisher Plc vs. Lowes Companies | Kingfisher Plc vs. Home Depot | Kingfisher Plc vs. Live Ventures | Kingfisher Plc vs. Haverty Furniture Companies |
| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Haverty Furniture Companies |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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