Correlation Between Home Depot and Utron
Can any of the company-specific risk be diversified away by investing in both Home Depot and Utron 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 Utron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Utron, you can compare the effects of market volatilities on Home Depot and Utron 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 Utron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Utron.
Diversification Opportunities for Home Depot and Utron
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Home and Utron is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Utron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utron 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 Utron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utron has no effect on the direction of Home Depot i.e., Home Depot and Utron go up and down completely randomly.
Pair Corralation between Home Depot and Utron
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.52 times more return on investment than Utron. However, Home Depot is 1.93 times less risky than Utron. It trades about 0.02 of its potential returns per unit of risk. Utron is currently generating about -0.06 per unit of risk. If you would invest 29,926 in Home Depot on January 24, 2024 and sell it today you would earn a total of 3,685 from holding Home Depot or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 78.95% |
| Values | Daily Returns |
Home Depot vs. Utron
Performance |
| Timeline |
| Home Depot |
| Utron |
Home Depot and Utron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Utron
The main advantage of trading using opposite Home Depot and Utron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Utron 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 Utron will offset losses from the drop in Utron's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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