Correlation Between Home Depot and Voya Solution

Can any of the company-specific risk be diversified away by investing in both Home Depot and Voya Solution 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 Voya Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Depot and Voya Solution Moderately, you can compare the effects of market volatilities on Home Depot and Voya Solution 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 Voya Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Voya Solution.

Diversification Opportunities for Home Depot and Voya Solution

0.66

Correlation Coefficient

Home Depot  Voya Solution

Poor diversification

The 3 months correlation between Home and Voya is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Voya Solution Moderately in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Solution Moderately 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 Voya Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Solution Moderately has no effect on the direction of Home Depot i.e., Home Depot and Voya Solution go up and down completely randomly.

Pair Corralation between Home Depot and Voya Solution

If you would invest  40,829  in Home Depot on September 17, 2024 and sell it today you would earn a total of  869.00  from holding Home Depot or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.0%
Values	Daily Returns

Home Depot  vs.  Voya Solution Moderately

Home Depot

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Voya Solution Moderately

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voya Solution Moderately has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Voya Solution is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Depot and Voya Solution

The main advantage of trading using opposite Home Depot and Voya Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Voya Solution 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 Voya Solution will offset losses from the drop in Voya Solution's long position.

The idea behind Home Depot and Voya Solution Moderately pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.