Correlation Between Home Depot and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Home Depot and Flow Traders 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 Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Flow Traders, you can compare the effects of market volatilities on Home Depot and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Flow Traders.
Diversification Opportunities for Home Depot and Flow Traders
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Flow is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Flow Traders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders 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 The Home Depot are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders has no effect on the direction of Home Depot i.e., Home Depot and Flow Traders go up and down completely randomly.
Pair Corralation between Home Depot and Flow Traders
Allowing for the 90-day total investment horizon The Home Depot is expected to under-perform the Flow Traders. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 1.55 times less risky than Flow Traders. The stock trades about -0.2 of its potential returns per unit of risk. The Flow Traders is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,919 in Flow Traders on September 11, 2025 and sell it today you would lose (169.00) from holding Flow Traders or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
The Home Depot vs. Flow Traders
Performance |
| Timeline |
| Home Depot |
| Flow Traders |
Home Depot and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Flow Traders
The main advantage of trading using opposite Home Depot and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Home Depot vs. Alibaba Group Holding | Home Depot vs. Lowes Companies | Home Depot vs. Toyota Motor | Home Depot vs. McDonalds |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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