Correlation Between Home Depot and Innovator Growth
Can any of the company-specific risk be diversified away by investing in both Home Depot and Innovator Growth 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 Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Innovator Growth Accelerated, you can compare the effects of market volatilities on Home Depot and Innovator Growth 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 Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Innovator Growth.
Diversification Opportunities for Home Depot and Innovator Growth
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Innovator is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Innovator Growth Accelerated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth Acc 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth Acc has no effect on the direction of Home Depot i.e., Home Depot and Innovator Growth go up and down completely randomly.
Pair Corralation between Home Depot and Innovator Growth
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.71 times more return on investment than Innovator Growth. However, Home Depot is 1.71 times more volatile than Innovator Growth Accelerated. It trades about 0.13 of its potential returns per unit of risk. Innovator Growth Accelerated is currently generating about 0.21 per unit of risk. If you would invest 38,001 in Home Depot on September 15, 2024 and sell it today you would earn a total of 3,697 from holding Home Depot or generate 9.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
Home Depot vs. Innovator Growth Accelerated
Performance |
Timeline |
Home Depot |
Innovator Growth Acc |
Home Depot and Innovator Growth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and Innovator Growth
The main advantage of trading using opposite Home Depot and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Innovator Growth 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 Innovator Growth will offset losses from the drop in Innovator Growth's long position.Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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