This module allows you to analyze existing cross correlation between Chevron Corporation and The Home Depot. You can compare the effects of market volatilities on Chevron 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 Chevron with a short position of Home Depot. See also your portfolio center. Please also check ongoing floating volatility patterns of Chevron and Home Depot.
Considering 30-days investment horizon, Chevron is expected to generate 1.19 times less return on investment than Home Depot. But when comparing it to its historical volatility, Chevron Corporation is 1.57 times less risky than Home Depot. It trades about 0.26 of its potential returns per unit of risk. The Home Depot is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 17,626 in The Home Depot on April 24, 2018 and sell it today you would earn a total of 1,041 from holding The Home Depot or generate 5.91% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp. and The Home Depot Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on The Home Depot and Chevron 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 Chevron Corporation 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 The Home Depot has no effect on the direction of Chevron i.e. Chevron and Home Depot go up and down completely randomly.
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