Correlation Between Global X and Home Depot
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and Home Depot, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Home Depot.
Diversification Opportunities for Global X and Home Depot
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Home is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Global X 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 Global X Funds 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 Global X i.e., Global X and Home Depot go up and down completely randomly.
Pair Corralation between Global X and Home Depot
Given the investment horizon of 90 days Global X Funds is expected to generate 0.68 times more return on investment than Home Depot. However, Global X Funds is 1.46 times less risky than Home Depot. It trades about -0.05 of its potential returns per unit of risk. Home Depot is currently generating about -0.47 per unit of risk. If you would invest 3,306 in Global X Funds on January 26, 2024 and sell it today you would lose (32.00) from holding Global X Funds or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. Home Depot
Performance |
| Timeline |
| Global X Funds |
| Home Depot |
Global X and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Home Depot
The main advantage of trading using opposite Global X and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. Vanguard Total Stock | Global X vs. SPDR SP 500 | Global X vs. iShares Core SP | Global X vs. Vanguard Total Bond |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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