Correlation Between Home Depot and ExcelFin Acquisition
Can any of the company-specific risk be diversified away by investing in both Home Depot and ExcelFin Acquisition 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 ExcelFin Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and ExcelFin Acquisition Corp, you can compare the effects of market volatilities on Home Depot and ExcelFin Acquisition 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 ExcelFin Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and ExcelFin Acquisition.
Diversification Opportunities for Home Depot and ExcelFin Acquisition
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Home and ExcelFin is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ExcelFin Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExcelFin Acquisition Corp 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 ExcelFin Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExcelFin Acquisition Corp has no effect on the direction of Home Depot i.e., Home Depot and ExcelFin Acquisition go up and down completely randomly.
Pair Corralation between Home Depot and ExcelFin Acquisition
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.31 times more return on investment than ExcelFin Acquisition. However, Home Depot is 3.26 times less risky than ExcelFin Acquisition. It trades about 0.09 of its potential returns per unit of risk. ExcelFin Acquisition Corp is currently generating about -0.1 per unit of risk. If you would invest 36,629 in Home Depot on October 20, 2024 and sell it today you would earn a total of 4,309 from holding Home Depot or generate 11.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 35.58% |
Values | Daily Returns |
Home Depot vs. ExcelFin Acquisition Corp
Performance |
Timeline |
Home Depot |
ExcelFin Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Home Depot and ExcelFin Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and ExcelFin Acquisition
The main advantage of trading using opposite Home Depot and ExcelFin Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, ExcelFin Acquisition 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 ExcelFin Acquisition will offset losses from the drop in ExcelFin Acquisition's long position.Home Depot vs. Arhaus Inc | Home Depot vs. Live Ventures | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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