Correlation Between Home Depot and Voya Investors

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

By analyzing existing cross correlation between Home Depot and Voya Investors Trust, you can compare the effects of market volatilities on Home Depot and Voya Investors 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 Voya Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Voya Investors.

Diversification Opportunities for Home Depot and Voya Investors

0.77

Correlation Coefficient

Home Depot  Voya Investors

Poor diversification

The 3 months correlation between Home and Voya is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Voya Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Investors Trust 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 Voya Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Investors Trust has no effect on the direction of Home Depot i.e., Home Depot and Voya Investors go up and down completely randomly.

Pair Corralation between Home Depot and Voya Investors

If you would invest  39,350  in Home Depot on September 4, 2024 and sell it today you would earn a total of  3,346  from holding Home Depot or generate 8.5% return on investment over 90 days.

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

Home Depot  vs.  Voya Investors Trust

Home Depot

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Home Depot exhibited solid returns over the last few months and may actually be approaching a breakup point.

Voya Investors Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Investors Trust are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Voya Investors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and Voya Investors

The main advantage of trading using opposite Home Depot and Voya Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Voya Investors 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 Voya Investors will offset losses from the drop in Voya Investors' long position.

The idea behind Home Depot and Voya Investors Trust 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.