Correlation Between Home Depot and Chewy

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

Diversification Opportunities for Home Depot and Chewy

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Home Depot and Chewy is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Home Depot i.e., Home Depot and Chewy go up and down completely randomly.

Pair Corralation between Home Depot and Chewy

Allowing for the 90-day total investment horizon Home Depot is expected to generate 0.54 times more return on investment than Chewy. However, Home Depot is 1.85 times less risky than Chewy. It trades about -0.08 of its potential returns per unit of risk. Chewy Inc is currently generating about -0.12 per unit of risk. If you would invest  30,582  in Home Depot on July 1, 2022 and sell it today you would lose (2,363)  from holding Home Depot or give up 7.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Home Depot  vs.  Chewy Inc

 Performance (%) 
       Timeline  
Home Depot 
Home Depot Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Home Depot are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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

Chewy Inc 
Chewy Performance
0 of 100
Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chewy Price Channel

Home Depot and Chewy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Home Depot and Chewy

The main advantage of trading using opposite Home Depot and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy's long position.
Home Depot vs. Amazon Inc
The idea behind Home Depot and Chewy 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.
Chewy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
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
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go
Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go