Correlation Between Home Depot and Brill Shoe
Can any of the company-specific risk be diversified away by investing in both Home Depot and Brill Shoe 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 Brill Shoe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Brill Shoe Industries, you can compare the effects of market volatilities on Home Depot and Brill Shoe 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 Brill Shoe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Brill Shoe.
Diversification Opportunities for Home Depot and Brill Shoe
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Brill is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Brill Shoe Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brill Shoe Industries 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 Brill Shoe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brill Shoe Industries has no effect on the direction of Home Depot i.e., Home Depot and Brill Shoe go up and down completely randomly.
Pair Corralation between Home Depot and Brill Shoe
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.28 times more return on investment than Brill Shoe. However, Home Depot is 3.51 times less risky than Brill Shoe. It trades about 0.02 of its potential returns per unit of risk. Brill Shoe Industries is currently generating about -0.02 per unit of risk. If you would invest 32,513 in Home Depot on January 24, 2024 and sell it today you would earn a total of 1,098 from holding Home Depot or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.08% |
| Values | Daily Returns |
Home Depot vs. Brill Shoe Industries
Performance |
| Timeline |
| Home Depot |
| Brill Shoe Industries |
Home Depot and Brill Shoe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Brill Shoe
The main advantage of trading using opposite Home Depot and Brill Shoe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Brill Shoe 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 Brill Shoe will offset losses from the drop in Brill Shoe's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
| Brill Shoe vs. Clal Insurance Enterprises | Brill Shoe vs. Israel Discount Bank | Brill Shoe vs. Bezeq Israeli Telecommunication | Brill Shoe vs. Alony Hetz Properties |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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