Correlation Between Kirklands and Home Depot
Can any of the company-specific risk be diversified away by investing in both Kirklands 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 Kirklands and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirklands and Home Depot, you can compare the effects of market volatilities on Kirklands 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 Kirklands with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirklands and Home Depot.
Diversification Opportunities for Kirklands and Home Depot
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kirklands and Home is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Kirklands 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 Kirklands 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 Kirklands i.e., Kirklands and Home Depot go up and down completely randomly.
Pair Corralation between Kirklands and Home Depot
Given the investment horizon of 90 days Kirklands is expected to under-perform the Home Depot. In addition to that, Kirklands is 2.37 times more volatile than Home Depot. It trades about -0.09 of its total potential returns per unit of risk. Home Depot is currently generating about 0.19 per unit of volatility. If you would invest 40,289 in Home Depot on August 28, 2024 and sell it today you would earn a total of 2,578 from holding Home Depot or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kirklands vs. Home Depot
Performance |
| Timeline |
| Kirklands |
| Home Depot |
Kirklands and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirklands and Home Depot
The main advantage of trading using opposite Kirklands and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands 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.| Kirklands vs. Floor Decor Holdings | Kirklands vs. Haverty Furniture Companies | Kirklands vs. Tile Shop Holdings | Kirklands vs. Arhaus Inc |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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