This module allows you to analyze existing cross correlation between Citigroup and The Home Depot. You can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Home Depot. See also your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Home Depot.
Taking into account the 30 trading days horizon, Citigroup is expected to under-perform the Home Depot. In addition to that, Citigroup is 1.28 times more volatile than The Home Depot. It trades about -0.03 of its total potential returns per unit of risk. The Home Depot is currently generating about 0.01 per unit of volatility. If you would invest 18,646 in The Home Depot on April 27, 2018 and sell it today you would earn a total of 39.00 from holding The Home Depot or generate 0.21% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Citigroup Inc and The Home Depot Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on The Home Depot and Citigroup 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 Citigroup 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 The Home Depot has no effect on the direction of Citigroup i.e. Citigroup and Home Depot go up and down completely randomly.
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