Correlation Between Harsco and Home Depot

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

By analyzing existing cross correlation between Harsco 575 percent and Home Depot, you can compare the effects of market volatilities on Harsco 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 Harsco with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harsco and Home Depot.

Diversification Opportunities for Harsco and Home Depot

0.26

Correlation Coefficient

Harsco  Home Depot

Modest diversification

The 3 months correlation between Harsco and Home is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Harsco 575 percent and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Harsco 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 Harsco 575 percent 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 Harsco i.e., Harsco and Home Depot go up and down completely randomly.

Pair Corralation between Harsco and Home Depot

Assuming the 90 days trading horizon Harsco 575 percent is expected to under-perform the Home Depot. In addition to that, Harsco is 2.88 times more volatile than Home Depot. It trades about -0.25 of its total potential returns per unit of risk. Home Depot is currently generating about 0.23 per unit of volatility. If you would invest  39,245  in Home Depot on October 22, 2024 and sell it today you would earn a total of  1,693  from holding Home Depot or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.68%
Values	Daily Returns

Harsco 575 percent  vs.  Home Depot

Harsco 575 percent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harsco 575 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Harsco 575 percent investors.

Home Depot

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Harsco and Home Depot

The main advantage of trading using opposite Harsco and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harsco 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 Harsco 575 percent 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..