Correlation Between Home Depot and ProShares Hedge
Can any of the company-specific risk be diversified away by investing in both Home Depot and ProShares Hedge 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 ProShares Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and ProShares Hedge Replication, you can compare the effects of market volatilities on Home Depot and ProShares Hedge 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 ProShares Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and ProShares Hedge.
Diversification Opportunities for Home Depot and ProShares Hedge
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and ProShares Hedge Replication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Hedge Repl 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 ProShares Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Hedge Repl has no effect on the direction of Home Depot i.e., Home Depot and ProShares Hedge go up and down completely randomly.
Pair Corralation between Home Depot and ProShares Hedge
Allowing for the 90-day total investment horizon Home Depot is expected to generate 5.35 times more return on investment than ProShares Hedge. However, Home Depot is 5.35 times more volatile than ProShares Hedge Replication. It trades about 0.14 of its potential returns per unit of risk. ProShares Hedge Replication is currently generating about 0.17 per unit of risk. If you would invest 36,733 in Home Depot on June 6, 2025 and sell it today you would earn a total of 4,038 from holding Home Depot or generate 10.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Home Depot vs. ProShares Hedge Replication
Performance |
| Timeline |
| Home Depot |
| ProShares Hedge Repl |
Home Depot and ProShares Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and ProShares Hedge
The main advantage of trading using opposite Home Depot and ProShares Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, ProShares Hedge 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 ProShares Hedge will offset losses from the drop in ProShares Hedge's long position.| Home Depot vs. Floor Decor Holdings | Home Depot vs. Arhaus Inc | Home Depot vs. Walmart | Home Depot vs. Procter Gamble |
| ProShares Hedge vs. ProShares Merger ETF | ProShares Hedge vs. IQ Hedge Multi Strategy | ProShares Hedge vs. ProShares Large Cap | ProShares Hedge vs. IQ Merger Arbitrage |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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