Correlation Between Home Depot and Tillys
Can any of the company-specific risk be diversified away by investing in both Home Depot and Tillys 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 Tillys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Depot and Tillys Inc, you can compare the effects of market volatilities on Home Depot and Tillys 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 Tillys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Tillys.
Diversification Opportunities for Home Depot and Tillys
0.82 | Correlation Coefficient |
Very poor diversification
The 1 month correlation between Home and Tillys is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc 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 Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Home Depot i.e., Home Depot and Tillys go up and down completely randomly.
Pair Corralation between Home Depot and Tillys
Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.65 times more return on investment than Tillys. However, Home Depot is 1.54 times less risky than Tillys. It trades about -0.05 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.13 per unit of risk. If you would invest 33,649 in Home Depot on March 9, 2024 and sell it today you would lose (539.00) from holding Home Depot or give up 1.6% of portfolio value over 90 days.
Time Period | 1 Month [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Home Depot vs. Tillys Inc
Performance |
Timeline |
Home Depot |
Tillys Inc |
Home Depot and Tillys Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Home Depot and Tillys
The main advantage of trading using opposite Home Depot and Tillys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Tillys 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 Tillys will offset losses from the drop in Tillys' long position.Home Depot vs. Tile Shop Holdings | Home Depot vs. Live Ventures | Home Depot vs. Haverty Furniture Companies |
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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