Correlation Between SCOM and Home Depot
Can any of the company-specific risk be diversified away by investing in both SCOM 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 SCOM and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOM and Home Depot, you can compare the effects of market volatilities on SCOM 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 SCOM with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOM and Home Depot.
Diversification Opportunities for SCOM and Home Depot
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SCOM and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SCOM and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and SCOM 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 SCOM 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 SCOM i.e., SCOM and Home Depot go up and down completely randomly.
Pair Corralation between SCOM and Home Depot
If you would invest (100.00) in SCOM on January 20, 2024 and sell it today you would earn a total of 100.00 from holding SCOM or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
SCOM vs. Home Depot
Performance |
| Timeline |
| SCOM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Depot |
SCOM and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOM and Home Depot
The main advantage of trading using opposite SCOM and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOM 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.| SCOM vs. ProShares Ultra SP500 | SCOM vs. HUMANA INC | SCOM vs. Aquagold International | SCOM vs. Thrivent High Yield |
| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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