Correlation Between Bed Bath and Home Depot

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Bed Bath 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 Bed Bath and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bed Bath Beyond and Home Depot, you can compare the effects of market volatilities on Bed Bath 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 Bed Bath with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bed Bath and Home Depot.

Diversification Opportunities for Bed Bath and Home Depot

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bed Bath and Home Depot is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bed Bath Beyond and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Bed Bath 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 Bed Bath Beyond 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 Bed Bath i.e., Bed Bath and Home Depot go up and down completely randomly.

Pair Corralation between Bed Bath and Home Depot

Given the investment horizon of 90 days Bed Bath Beyond is expected to under-perform the Home Depot. In addition to that, Bed Bath is 3.48 times more volatile than Home Depot. It trades about -0.35 of its total potential returns per unit of risk. Home Depot is currently generating about -0.09 per unit of volatility. If you would invest  29,310  in Home Depot on July 1, 2022 and sell it today you would lose (1,477)  from holding Home Depot or give up 5.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bed Bath Beyond  vs.  Home Depot

 Performance (%) 
       Timeline  
Bed Bath Beyond 
Bed Bath Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bed Bath Beyond are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bed Bath showed solid returns over the last few months and may actually be approaching a breakup point.

Bed Bath Price Channel

Home Depot 
Home Depot Performance
0 of 100
Over the last 90 days Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Home Depot is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Home Depot Price Channel

Bed Bath and Home Depot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bed Bath and Home Depot

The main advantage of trading using opposite Bed Bath and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bed Bath 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.
Bed Bath vs. Best Buy Company
The idea behind Bed Bath Beyond and Home Depot 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.
Home Depot vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Go