Correlation Between ETRADE Financial and Home Depot
Can any of the company-specific risk be diversified away by investing in both ETRADE Financial 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 ETRADE Financial and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRADE Financial LLC and Home Depot, you can compare the effects of market volatilities on ETRADE Financial 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 ETRADE Financial with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRADE Financial and Home Depot.
Diversification Opportunities for ETRADE Financial and Home Depot
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ETRADE and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ETRADE Financial LLC and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and ETRADE Financial 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 ETRADE Financial LLC 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 ETRADE Financial i.e., ETRADE Financial and Home Depot go up and down completely randomly.
Pair Corralation between ETRADE Financial and Home Depot
If you would invest 27,933 in Home Depot on January 26, 2024 and sell it today you would earn a total of 5,368 from holding Home Depot or generate 19.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
ETRADE Financial LLC vs. Home Depot
Performance |
| Timeline |
| ETRADE Financial LLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Depot |
ETRADE Financial and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRADE Financial and Home Depot
The main advantage of trading using opposite ETRADE Financial and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRADE Financial 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.| ETRADE Financial vs. Marchex | ETRADE Financial vs. Copa Holdings SA | ETRADE Financial vs. Organic Sales and | ETRADE Financial vs. WPP PLC ADR |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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