Correlation Between Wheaton Precious and Home Depot
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Home Depot, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Home Depot.
Diversification Opportunities for Wheaton Precious and Home Depot
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wheaton and Home is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Home Depot go up and down completely randomly.
Pair Corralation between Wheaton Precious and Home Depot
Assuming the 90 days trading horizon Wheaton Precious Metals is expected to generate 11.24 times more return on investment than Home Depot. However, Wheaton Precious is 11.24 times more volatile than Home Depot. It trades about 0.05 of its potential returns per unit of risk. Home Depot is currently generating about 0.09 per unit of risk. If you would invest 306,582 in Wheaton Precious Metals on September 2, 2024 and sell it today you would earn a total of 183,918 from holding Wheaton Precious Metals or generate 59.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.61% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Home Depot
Performance |
| Timeline |
| Wheaton Precious Metals |
| Home Depot |
Wheaton Precious and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Home Depot
The main advantage of trading using opposite Wheaton Precious and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Givaudan SA | Wheaton Precious vs. Antofagasta PLC | Wheaton Precious vs. Centamin PLC | Wheaton Precious vs. Atalaya Mining |
| Home Depot vs. Livermore Investments Group | Home Depot vs. Extra Space Storage | Home Depot vs. TR Property Investment | Home Depot vs. Axway Software SA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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