Correlation Between Home Depot and Dimensional Targeted

Can any of the company-specific risk be diversified away by investing in both Home Depot and Dimensional Targeted 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 Dimensional Targeted into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Home Depot and Dimensional Targeted Value, you can compare the effects of market volatilities on Home Depot and Dimensional Targeted 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 Dimensional Targeted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Depot and Dimensional Targeted.

Diversification Opportunities for Home Depot and Dimensional Targeted

0.49

Correlation Coefficient

Home Depot  Dimensional Targeted

Very weak diversification

The 3 months correlation between Home and Dimensional is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Dimensional Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Targeted 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 The Home Depot are associated (or correlated) with Dimensional Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Targeted has no effect on the direction of Home Depot i.e., Home Depot and Dimensional Targeted go up and down completely randomly.

Pair Corralation between Home Depot and Dimensional Targeted

Allowing for the 90-day total investment horizon The Home Depot is expected to under-perform the Dimensional Targeted. In addition to that, Home Depot is 1.31 times more volatile than Dimensional Targeted Value. It trades about -0.15 of its total potential returns per unit of risk. Dimensional Targeted Value is currently generating about 0.01 per unit of volatility. If you would invest  5,887  in Dimensional Targeted Value on September 4, 2025 and sell it today you would earn a total of  0.00  from holding Dimensional Targeted Value or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Home Depot  vs.  Dimensional Targeted Value

Home Depot

Risk-Adjusted Performance

Weakest

Over the last 90 days The Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2026. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Dimensional Targeted

Risk-Adjusted Performance

Weakest

Over the last 90 days Dimensional Targeted Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dimensional Targeted is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Home Depot and Dimensional Targeted

The main advantage of trading using opposite Home Depot and Dimensional Targeted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot position performs unexpectedly, Dimensional Targeted 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 Dimensional Targeted will offset losses from the drop in Dimensional Targeted's long position.

The idea behind The Home Depot and Dimensional Targeted Value 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.