Correlation Between Footlocker and Home Depot

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

Diversification Opportunities for Footlocker and Home Depot

  Correlation Coefficient

Weak diversification

The 3 months correlation between Footlocker and Home Depot is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Footlocker and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Footlocker 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 Footlocker 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 Footlocker i.e., Footlocker and Home Depot go up and down completely randomly.

Pair Corralation between Footlocker and Home Depot

Allowing for the 90-day total investment horizon Footlocker is expected to under-perform the Home Depot. In addition to that, Footlocker is 1.94 times more volatile than Home Depot. It trades about -0.06 of its total potential returns per unit of risk. Home Depot is currently generating about -0.04 per unit of volatility. If you would invest  36,503  in Home Depot on May 13, 2022 and sell it today you would lose (5,345)  from holding Home Depot or give up 14.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

Footlocker  vs.  Home Depot

 Performance (%) 
Footlocker Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Footlocker are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady essential indicators, Footlocker is not utilizing all of its potentials. The new stock price chaos, may contribute to medium-term losses for the stakeholders.

Footlocker Price Channel

Home Depot 
Home Depot Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Home Depot may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Home Depot Price Channel

Footlocker and Home Depot Volatility Contrast

   Predicted Return Density   

Pair Trading with Footlocker and Home Depot

The main advantage of trading using opposite Footlocker and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Footlocker 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.
The idea behind Footlocker 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.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

Other Complementary Tools

Transaction History
View history of all your transactions and understand their impact on performance
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Money Managers
Screen money managers from public funds and ETFs managed around the world
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation