Correlation Between Home Depot and Gan Shmuel
Can any of the company-specific risk be diversified away by investing in both Home Depot and Gan Shmuel 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 Gan Shmuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Gan Shmuel, you can compare the effects of market volatilities on Home Depot and Gan Shmuel 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 Gan Shmuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Gan Shmuel.
Diversification Opportunities for Home Depot and Gan Shmuel
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Home and Gan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Gan Shmuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gan Shmuel 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 Gan Shmuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gan Shmuel has no effect on the direction of Home Depot i.e., Home Depot and Gan Shmuel go up and down completely randomly.
Pair Corralation between Home Depot and Gan Shmuel
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Gan Shmuel. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 4.74 times less risky than Gan Shmuel. The stock trades about -0.47 of its potential returns per unit of risk. The Gan Shmuel is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 171,072 in Gan Shmuel on January 26, 2024 and sell it today you would earn a total of 80,528 from holding Gan Shmuel or generate 47.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Home Depot vs. Gan Shmuel
Performance |
| Timeline |
| Home Depot |
| Gan Shmuel |
Home Depot and Gan Shmuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Gan Shmuel
The main advantage of trading using opposite Home Depot and Gan Shmuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Gan Shmuel 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 Gan Shmuel will offset losses from the drop in Gan Shmuel's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. LL Flooring Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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