Correlation Between Comcast Corp and Home Depot
Can any of the company-specific risk be diversified away by investing in both Comcast Corp 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 Comcast Corp and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Comcast Corp and Home Depot, you can compare the effects of market volatilities on Comcast Corp 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 Comcast Corp with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comcast Corp and Home Depot.
Diversification Opportunities for Comcast Corp and Home Depot
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Comcast and Home is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Comcast Corp and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Comcast Corp 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 Comcast Corp 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 Comcast Corp i.e., Comcast Corp and Home Depot go up and down completely randomly.
Pair Corralation between Comcast Corp and Home Depot
Assuming the 90 days horizon Comcast Corp is expected to generate 1.24 times more return on investment than Home Depot. However, Comcast Corp is 1.24 times more volatile than Home Depot. It trades about -0.3 of its potential returns per unit of risk. Home Depot is currently generating about -0.47 per unit of risk. If you would invest 4,217 in Comcast Corp on January 26, 2024 and sell it today you would lose (430.00) from holding Comcast Corp or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Comcast Corp vs. Home Depot
Performance |
| Timeline |
| Comcast Corp |
| Home Depot |
Comcast Corp and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Comcast Corp and Home Depot
The main advantage of trading using opposite Comcast Corp and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comcast Corp 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.| Comcast Corp vs. Liberty Global PLC | Comcast Corp vs. Shenandoah Telecommunications Co | Comcast Corp vs. Liberty Global PLC | Comcast Corp vs. Liberty Latin America |
| Home Depot vs. Aquagold International | Home Depot vs. Thrivent High Yield | Home Depot vs. Morningstar Unconstrained Allocation | Home Depot vs. Via Renewables |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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