Correlation Between Home Depot and USCF Gold

Can any of the company-specific risk be diversified away by investing in both Home Depot and USCF Gold 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 USCF Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Depot and USCF Gold Strategy, you can compare the effects of market volatilities on Home Depot and USCF Gold 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 USCF Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and USCF Gold.

Diversification Opportunities for Home Depot and USCF Gold

-0.26

Correlation Coefficient

Home Depot  USCF Gold

Very good diversification

The 3 months correlation between Home and USCF is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and USCF Gold Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCF Gold Strategy 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 USCF Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCF Gold Strategy has no effect on the direction of Home Depot i.e., Home Depot and USCF Gold go up and down completely randomly.

Pair Corralation between Home Depot and USCF Gold

Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.0 times more return on investment than USCF Gold. However, Home Depot is 1.0 times less risky than USCF Gold. It trades about 0.06 of its potential returns per unit of risk. USCF Gold Strategy is currently generating about -0.01 per unit of risk. If you would invest  35,950  in Home Depot on May 3, 2025 and sell it today you would earn a total of  1,416  from holding Home Depot or generate 3.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Home Depot  vs.  USCF Gold Strategy

Home Depot

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

USCF Gold Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days USCF Gold Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, USCF Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and USCF Gold

The main advantage of trading using opposite Home Depot and USCF Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, USCF Gold 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 USCF Gold will offset losses from the drop in USCF Gold's long position.

The idea behind Home Depot and USCF Gold Strategy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.