Correlation Between EVERSOURCE and Home Depot
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By analyzing existing cross correlation between EVERSOURCE ENERGY 33 and Home Depot, you can compare the effects of market volatilities on EVERSOURCE 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 EVERSOURCE with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVERSOURCE and Home Depot.
Diversification Opportunities for EVERSOURCE and Home Depot
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EVERSOURCE and Home is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding EVERSOURCE ENERGY 33 and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and EVERSOURCE 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 EVERSOURCE ENERGY 33 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 EVERSOURCE i.e., EVERSOURCE and Home Depot go up and down completely randomly.
Pair Corralation between EVERSOURCE and Home Depot
Assuming the 90 days trading horizon EVERSOURCE is expected to generate 9.05 times less return on investment than Home Depot. But when comparing it to its historical volatility, EVERSOURCE ENERGY 33 is 1.41 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 0.06 of returns per unit of risk over similar time horizon. If you would invest 31,147 in Home Depot on September 2, 2024 and sell it today you would earn a total of 11,766 from holding Home Depot or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.23% |
| Values | Daily Returns |
EVERSOURCE ENERGY 33 vs. Home Depot
Performance |
| Timeline |
| EVERSOURCE ENERGY |
| Home Depot |
EVERSOURCE and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVERSOURCE and Home Depot
The main advantage of trading using opposite EVERSOURCE and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVERSOURCE 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.| EVERSOURCE vs. Analog Devices | EVERSOURCE vs. Paysafe | EVERSOURCE vs. Asure Software | EVERSOURCE vs. Turning Point Brands |
| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Lowes 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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