Correlation Between Intel and Home Depot
Can any of the company-specific risk be diversified away by investing in both Intel 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 Intel and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intel and Home Depot, you can compare the effects of market volatilities on Intel 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 Intel with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intel and Home Depot.
Diversification Opportunities for Intel and Home Depot
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intel and Home is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Intel 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 Intel 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 Intel i.e., Intel and Home Depot go up and down completely randomly.
Pair Corralation between Intel and Home Depot
Given the investment horizon of 90 days Intel is expected to under-perform the Home Depot. In addition to that, Intel is 1.72 times more volatile than Home Depot. It trades about -0.28 of its total potential returns per unit of risk. Home Depot is currently generating about -0.39 per unit of volatility. If you would invest 37,941 in Home Depot on January 19, 2024 and sell it today you would lose (4,658) from holding Home Depot or give up 12.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intel vs. Home Depot
Performance |
| Timeline |
| Intel |
| Home Depot |
Intel and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intel and Home Depot
The main advantage of trading using opposite Intel and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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.| Intel vs. NVIDIA | Intel vs. Taiwan Semiconductor Manufacturing | Intel vs. Marvell Technology Group | Intel vs. Micron Technology |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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