Correlation Analysis Between Home Depot and Lumber Liquidators

Analyzing existing cross correlation between Home Depot and Lumber Liquidators Holdings In. You can compare the effects of market volatilities on Home Depot and Lumber Liquidators 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 Lumber Liquidators. See also your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Lumber Liquidators.
Horizon     30 Days    Login   to change
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Comparative Performance

Home Depot  
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Risk-Adjusted Performance

Over the last 30 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Home Depot is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.
Lumber Liquidators  
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Risk-Adjusted Performance

Over the last 30 days Lumber Liquidators Holdings In has generated negative risk-adjusted returns adding no value to investors with long positions. Even with considerably steady technical indicators, Lumber Liquidators is not utilizing all of its potentials. The ongoing stock price chaos, may contribute to medium term losses for the stakeholders.

Home Depot and Lumber Liquidators Volatility Contrast

 Predicted Return Density 
    
  Returns 

Home Depot Inc  vs.  Lumber Liquidators Holdings In

 Performance (%) 
    
  Timeline 

Pair Volatility

Allowing for the 30-days total investment horizon, Home Depot is expected to under-perform the Lumber Liquidators. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 2.87 times less risky than Lumber Liquidators. The stock trades about -0.03 of its potential returns per unit of risk. The Lumber Liquidators Holdings In is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  965.00  in Lumber Liquidators Holdings In on December 21, 2019 and sell it today you would lose (30.00)  from holding Lumber Liquidators Holdings In or give up 3.11% of portfolio value over 30 days.

Pair Corralation between Home Depot and Lumber Liquidators

-0.17
Time Period3 Months [change]
DirectionNegative 
StrengthInsignificant
Accuracy98.41%
ValuesDaily Returns

Diversification Opportunities for Home Depot and Lumber Liquidators

Home Depot Inc diversification synergy

Good diversification

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