Home Depot Correlations

Stocks . USA . 
Stock . Home Depot
HD Stock  USD 356.42  14.47  3.90%   
The current 90-days correlation between Home Depot and Lowes Companies is 0.87 (i.e., Very poor diversification). The correlation of Home Depot is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.

Home Depot Correlation With Market

Poor diversification

The correlation between Home Depot and DJI is 0.69 (i.e., Poor diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Home Depot and DJI in the same portfolio, assuming nothing else is changed.
  
Check out Risk vs Return Analysis to better understand how to build diversified portfolios, which includes a position in Home Depot. Also, note that the market value of any company could be closely tied with the direction of predictive economic indicators such as signals in unemployment.
For information on how to trade Home Stock refer to our How to Trade Home Stock guide.

Moving together with Home Stock

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Moving against Home Stock

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Related Correlations Analysis

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Correlation Matchups

Over a given time period, the two securities move together when the Correlation Coefficient is positive. Conversely, the two assets move in opposite directions when the Correlation Coefficient is negative. Determining your positions' relationship to each other is valuable for analyzing and projecting your portfolio's future expected return and risk.
High positive correlations   
LIVE
+ 0.86
LOW
LIVE
+ 0.86
KIRK
LOW
+ 0.85
FND
LIVE
+ 0.83
FND
LOW
+ 0.76
ARHS
HVT
+ 0.72
FND
  
High negative correlations   
HVT-A
- 0.05
TTSH
HVT-A
- 0.01
ARHS

Risk-Adjusted Indicators

There is a big difference between Home Stock performing well and Home Depot Company doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Home Depot's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

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