Correlation Between Home Depot and Valneva SE
Can any of the company-specific risk be diversified away by investing in both Home Depot and Valneva SE 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 Valneva SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Valneva SE ADR, you can compare the effects of market volatilities on Home Depot and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Valneva SE.
Diversification Opportunities for Home Depot and Valneva SE
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Home and Valneva is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Home Depot i.e., Home Depot and Valneva SE go up and down completely randomly.
Pair Corralation between Home Depot and Valneva SE
Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the Valneva SE. But the stock apears to be less risky and, when comparing its historical volatility, Home Depot is 3.12 times less risky than Valneva SE. The stock trades about -0.49 of its potential returns per unit of risk. The Valneva SE ADR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 781.00 in Valneva SE ADR on January 25, 2024 and sell it today you would lose (5.94) from holding Valneva SE ADR or give up 0.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Home Depot vs. Valneva SE ADR
Performance |
Timeline |
Home Depot |
Valneva SE ADR |
Home Depot and Valneva SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and Valneva SE
The main advantage of trading using opposite Home Depot and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE'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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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