Correlation Between Home Depot and Amazon

Specify exactly 2 symbols:
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 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

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Home Depot and Amazon is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding 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 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

Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.67 times more return on investment than Amazon. However, Home Depot is 1.49 times less risky than Amazon. It trades about 0.0 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.02 per unit of risk. If you would invest  27,550  in Home Depot on June 29, 2022 and sell it today you would lose (764.00)  from holding Home Depot or give up 2.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Home Depot  vs.  Amazon Inc

 Performance (%) 
       Timeline  
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

Amazon Inc 
Amazon Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Amazon may actually be approaching a critical reversion point that can send shares even higher in October 2022.

Amazon Price Channel

Home Depot and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and Amazon

The main advantage of trading using opposite Home Depot and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
Home Depot vs. Kibush Capital Corp
The idea behind Home Depot and Amazon Inc 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.
Amazon vs. Clearwater Paper Corp
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

Other Complementary Tools

Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Go
Probability Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Go
Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Equity Valuation
Check real value of public entities based on technical and fundamental data
Go