Correlation Between IShares Core and Home Depot
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Home Depot, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Home Depot.
Diversification Opportunities for IShares Core and Home Depot
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Home is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and IShares Core 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 iShares Core SP 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 IShares Core i.e., IShares Core and Home Depot go up and down completely randomly.
Pair Corralation between IShares Core and Home Depot
Considering the 90-day investment horizon IShares Core is expected to generate 1.08 times less return on investment than Home Depot. But when comparing it to its historical volatility, iShares Core SP is 1.19 times less risky than Home Depot. It trades about 0.03 of its potential returns per unit of risk. Home Depot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 28,511 in Home Depot on January 19, 2024 and sell it today you would earn a total of 4,778 from holding Home Depot or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares Core SP vs. Home Depot
Performance |
| Timeline |
| iShares Core SP |
| Home Depot |
IShares Core and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Home Depot
The main advantage of trading using opposite IShares Core and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. Vanguard Small Cap Index | IShares Core vs. Vanguard Large Cap Index | IShares Core vs. Vanguard Small Cap Growth | IShares Core vs. Vanguard Small Cap Value |
| Home Depot vs. Floor Decor Holdings | Home Depot vs. LL Flooring Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |