Correlation Between Adobe and Home Depot
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By analyzing existing cross correlation between Adobe 23 percent and Home Depot, you can compare the effects of market volatilities on Adobe 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 Adobe with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe and Home Depot.
Diversification Opportunities for Adobe and Home Depot
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adobe and Home is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Adobe 23 percent and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Adobe 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 Adobe 23 percent 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 Adobe i.e., Adobe and Home Depot go up and down completely randomly.
Pair Corralation between Adobe and Home Depot
Assuming the 90 days trading horizon Adobe is expected to generate 57.43 times less return on investment than Home Depot. But when comparing it to its historical volatility, Adobe 23 percent is 3.11 times less risky than Home Depot. It trades about 0.01 of its potential returns per unit of risk. Home Depot is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 32,341 in Home Depot on September 4, 2024 and sell it today you would earn a total of 10,355 from holding Home Depot or generate 32.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Adobe 23 percent vs. Home Depot
Performance |
| Timeline |
| Adobe 23 percent |
| Home Depot |
Adobe and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe and Home Depot
The main advantage of trading using opposite Adobe and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe 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.The idea behind Adobe 23 percent and Home Depot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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