Correlation Between Home Depot and Macys
Can any of the company-specific risk be diversified away by investing in both Home Depot and Macys 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 Home Depot and Macys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Macys Inc, you can compare the effects of market volatilities on Home Depot and Macys 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 Macys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Macys.
Diversification Opportunities for Home Depot and Macys
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Macys is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Macys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macys Inc 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 Macys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macys Inc has no effect on the direction of Home Depot i.e., Home Depot and Macys go up and down completely randomly.
Pair Corralation between Home Depot and Macys
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Macys. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 1.6 times less risky than Macys. The stock trades about -0.42 of its potential returns per unit of risk. The Macys Inc is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest 2,120 in Macys Inc on January 20, 2024 and sell it today you would lose (267.00) from holding Macys Inc or give up 12.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Macys Inc
Performance |
| Timeline |
| Home Depot |
| Macys Inc |
Home Depot and Macys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Macys
The main advantage of trading using opposite Home Depot and Macys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Macys 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 Macys will offset losses from the drop in Macys' long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
| Macys vs. Marks Spencer Group | Macys vs. Marks and Spencer | Macys vs. Dillards Capital Trust | Macys vs. Companhia Brasileira de |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stocks Directory Find actively traded stocks across global markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |