Correlation Between Visa and Home Depot
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Home Depot, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Home Depot.
Diversification Opportunities for Visa and Home Depot
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Visa and Home is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Visa 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 Visa Class A 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 Visa i.e., Visa and Home Depot go up and down completely randomly.
Pair Corralation between Visa and Home Depot
Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.84 times more return on investment than Home Depot. However, Visa Class A is 1.19 times less risky than Home Depot. It trades about 0.33 of its potential returns per unit of risk. Home Depot is currently generating about 0.19 per unit of risk. If you would invest 28,365 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Home Depot
Performance |
| Timeline |
| Visa Class A |
| Home Depot |
Visa and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Home Depot
The main advantage of trading using opposite Visa and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Stocks Directory Find actively traded stocks across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |