Correlation Between Home Depot and COMCAST

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

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

Diversification Opportunities for Home Depot and COMCAST

-0.3

Correlation Coefficient

Home Depot  COMCAST

Very good diversification

The 3 months correlation between Home and COMCAST is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and COMCAST PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMCAST PORATION 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 COMCAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMCAST PORATION has no effect on the direction of Home Depot i.e., Home Depot and COMCAST go up and down completely randomly.

Pair Corralation between Home Depot and COMCAST

Allowing for the 90-day total investment horizon Home Depot is expected to under-perform the COMCAST. In addition to that, Home Depot is 1.69 times more volatile than COMCAST PORATION. It trades about -0.08 of its total potential returns per unit of risk. COMCAST PORATION is currently generating about 0.06 per unit of volatility. If you would invest  5,997  in COMCAST PORATION on December 30, 2024 and sell it today you would earn a total of  198.00  from holding COMCAST PORATION or generate 3.3% return on investment over 90 days.

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

Home Depot  vs.  COMCAST PORATION

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. In spite of latest uncertain performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

COMCAST PORATION

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COMCAST PORATION are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, COMCAST is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and COMCAST

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

The idea behind Home Depot and COMCAST PORATION 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.