Correlation Between Chocoladefabriken and Home Depot

Can any of the company-specific risk be diversified away by investing in both Chocoladefabriken 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 Chocoladefabriken and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chocoladefabriken Lindt Spruengli and Home Depot, you can compare the effects of market volatilities on Chocoladefabriken 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 Chocoladefabriken with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chocoladefabriken and Home Depot.

Diversification Opportunities for Chocoladefabriken and Home Depot

0.1

Correlation Coefficient

Chocoladefabriken  Home Depot

Average diversification

The 3 months correlation between Chocoladefabriken and Home is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chocoladefabriken Lindt Spruen and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Chocoladefabriken 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 Chocoladefabriken Lindt Spruengli 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 Chocoladefabriken i.e., Chocoladefabriken and Home Depot go up and down completely randomly.

Pair Corralation between Chocoladefabriken and Home Depot

If you would invest  10,040,000  in Chocoladefabriken Lindt Spruengli on December 2, 2024 and sell it today you would earn a total of  960,000  from holding Chocoladefabriken Lindt Spruengli or generate 9.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chocoladefabriken Lindt Spruen  vs.  Home Depot

Chocoladefabriken Lindt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chocoladefabriken Lindt Spruengli are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chocoladefabriken may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Home Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Home Depot is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chocoladefabriken and Home Depot

The main advantage of trading using opposite Chocoladefabriken and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chocoladefabriken 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.

The idea behind Chocoladefabriken Lindt Spruengli and Home Depot pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.