Correlation Between Home Depot and BOMBAY INC

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

Diversification Opportunities for Home Depot and BOMBAY INC

  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Home Depot and BOMBAY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and BOMBAY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOMBAY 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 BOMBAY INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOMBAY INC has no effect on the direction of Home Depot i.e., Home Depot and BOMBAY INC go up and down completely randomly.

Pair Corralation between Home Depot and BOMBAY INC

If you would invest  27,592  in Home Depot on April 8, 2022 and sell it today you would earn a total of  949.00  from holding Home Depot or generate 3.44% return on investment over 90 days.
Time Period3 Months [change]
ValuesDaily Returns

Home Depot  vs.  BOMBAY INC

 Performance (%) 
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 latest sluggish performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
Payout Ratio
Last Split Factor
Forward Annual Dividend Rate
Dividend Date
Ex Dividend Date
Last Split Date

Home Depot Price Channel

BOMBAY Performance
0 of 100
Over the last 90 days BOMBAY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, BOMBAY INC is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Home Depot and BOMBAY INC Volatility Contrast

 Predicted Return Density 

Pair Trading with Home Depot and BOMBAY INC

The main advantage of trading using opposite Home Depot and BOMBAY INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, BOMBAY INC 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 BOMBAY INC will offset losses from the drop in BOMBAY INC's long position.
The idea behind Home Depot and BOMBAY 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.
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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