Correlation Between Whole Foods and Home Depot
Can any of the company-specific risk be diversified away by investing in both Whole Foods 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 Whole Foods and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Whole Foods Market and Home Depot, you can compare the effects of market volatilities on Whole Foods 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 Whole Foods with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Whole Foods and Home Depot.
Diversification Opportunities for Whole Foods and Home Depot
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Whole and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Whole Foods Market and Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Whole Foods 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 Whole Foods Market 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 Whole Foods i.e., Whole Foods and Home Depot go up and down completely randomly.
Pair Corralation between Whole Foods and Home Depot
If you would invest (100.00) in Whole Foods Market on January 20, 2024 and sell it today you would earn a total of 100.00 from holding Whole Foods Market or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Whole Foods Market vs. Home Depot
Performance |
| Timeline |
| Whole Foods Market |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Home Depot |
Whole Foods and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Whole Foods and Home Depot
The main advantage of trading using opposite Whole Foods and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Whole Foods 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.| Whole Foods vs. Weyco Group | Whole Foods vs. The Wendys Co | Whole Foods vs. Repligen | Whole Foods vs. Acco Brands |
| Home Depot vs. Arhaus Inc | Home Depot vs. Haverty Furniture Companies | Home Depot vs. Kirklands | Home Depot vs. Live Ventures |
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 the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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