Correlation Analysis Between Apple and Home Depot

Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and The Home Depot Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on The Home Depot and Apple 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 Apple 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 The Home Depot has no effect on the direction of Apple i.e. Apple and Home Depot go up and down completely randomly.