Correlation Between Home Depot and Amazon
Can any of the company-specific risk be diversified away by investing in both Home Depot and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Home Depot and Amazon Inc, you can compare the effects of market volatilities on Home Depot and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Amazon.
Diversification Opportunities for Home Depot and Amazon
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Amazon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon 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 The Home Depot are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Home Depot i.e., Home Depot and Amazon go up and down completely randomly.
Pair Corralation between Home Depot and Amazon
Assuming the 90 days trading horizon The Home Depot is expected to generate 1.37 times more return on investment than Amazon. However, Home Depot is 1.37 times more volatile than Amazon Inc. It trades about -0.16 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.45 per unit of risk. If you would invest 8,411 in The Home Depot on December 9, 2024 and sell it today you would lose (599.00) from holding The Home Depot or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Home Depot vs. Amazon Inc
Performance |
| Timeline |
| Home Depot |
| Amazon Inc |
Home Depot and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Depot and Amazon
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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