Correlation Between Western Union and Home Depot

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Western Union 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 Western Union and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Western Union and The Home Depot, you can compare the effects of market volatilities on Western Union 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 Western Union with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Union and Home Depot.

Diversification Opportunities for Western Union and Home Depot

WesternHomeDiversified AwayWesternHomeDiversified Away100%
-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Western and Home is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Western Union and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Western Union 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 The Western Union 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 Western Union i.e., Western Union and Home Depot go up and down completely randomly.

Pair Corralation between Western Union and Home Depot

Assuming the 90 days horizon The Western Union is expected to under-perform the Home Depot. But the stock apears to be less risky and, when comparing its historical volatility, The Western Union is 1.19 times less risky than Home Depot. The stock trades about -0.11 of its potential returns per unit of risk. The The Home Depot is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  809,701  in The Home Depot on October 21, 2024 and sell it today you would earn a total of  40,299  from holding The Home Depot or generate 4.98% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.39%
ValuesDaily Returns

The Western Union  vs.  The Home Depot

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -50510
JavaScript chart by amCharts 3.21.15WU HD
       Timeline  
Western Union 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Western Union has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan215220225230235
Home Depot 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in The Home Depot are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Home Depot is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan7,8008,0008,2008,4008,6008,8009,000

Western Union and Home Depot Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.99-1.52-1.05-0.58-0.110.280.751.221.692.16 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15WU HD
       Returns  

Pair Trading with Western Union and Home Depot

The main advantage of trading using opposite Western Union and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Union 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 The Western Union and The 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.
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

Other Complementary Tools

Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Equity Valuation
Check real value of public entities based on technical and fundamental data
Commodity Channel
Use Commodity Channel Index to analyze current equity momentum
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like