Two Equities Correlation Analysis
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HD
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Home Depot and NYSE Composite
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and NYSE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Home Depot 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 Home Depot are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Home Depot i.e., Home Depot and NYSE Composite go up and down completely randomly.
Pair Corralation between Home Depot and NYSE Composite
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the NYSE Composite. In addition to that, Home Depot is 1.87 times more volatile than NYSE Composite. It trades about -0.49 of its total potential returns per unit of risk. NYSE Composite is currently generating about -0.19 per unit of volatility. If you would invest 1,807,715 in NYSE Composite on January 24, 2024 and sell it today you would lose (47,496) from holding NYSE Composite or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Home Depot vs. NYSE Composite
Performance |
| Timeline |
Home Depot and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Home Depot
Pair trading matchups for Home Depot
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Home Depot and NYSE Composite
The main advantage of trading using opposite Home Depot and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
| NYSE Composite vs. The Wendys Co | NYSE Composite vs. Dine Brands Global | NYSE Composite vs. BJs Restaurants | NYSE Composite vs. Rave Restaurant Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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