This module allows you to analyze existing cross correlation between The Home Depot and Chevron Corporation. You can compare the effects of market volatilities on Home Depot and Chevron 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 Home Depot with a short position of Chevron. See also your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Chevron.
Allowing for the 30-days total investment horizon, The Home Depot is expected to under-perform the Chevron. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 2.28 times less risky than Chevron. The stock trades about -0.3 of its potential returns per unit of risk. The Chevron Corporation is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 12,227 in Chevron Corporation on July 20, 2018 and sell it today you would lose (447.00) from holding Chevron Corporation or give up 3.66% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot Inc and Chevron Corp. in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Chevron 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 The Home Depot are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of Home Depot i.e. Home Depot and Chevron go up and down completely randomly.
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