Correlation Between Home Depot and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Home Depot and Xtrackers MSCI 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 Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Xtrackers MSCI EAFE, you can compare the effects of market volatilities on Home Depot and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Xtrackers MSCI.
Diversification Opportunities for Home Depot and Xtrackers MSCI
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Xtrackers is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI EAFE has no effect on the direction of Home Depot i.e., Home Depot and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Home Depot and Xtrackers MSCI
Allowing for the 90-day total investment horizon Home Depot is expected to generate 1.87 times more return on investment than Xtrackers MSCI. However, Home Depot is 1.87 times more volatile than Xtrackers MSCI EAFE. It trades about 0.18 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.12 per unit of risk. If you would invest 36,314 in Home Depot on June 9, 2025 and sell it today you would earn a total of 5,581 from holding Home Depot or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Depot vs. Xtrackers MSCI EAFE
Performance |
| Timeline |
| Home Depot |
| Xtrackers MSCI EAFE |
Home Depot and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Xtrackers MSCI
The main advantage of trading using opposite Home Depot and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Home Depot vs. Arhaus Inc | Home Depot vs. Walmart | Home Depot vs. Procter Gamble | Home Depot vs. The Coca Cola |
| Xtrackers MSCI vs. Global X MSCI | Xtrackers MSCI vs. First Trust Dow | Xtrackers MSCI vs. Fidelity International High | Xtrackers MSCI vs. Xtrackers USD High |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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