The Home Depot, Inc. (HD) Beta & Volatility
As of May 22, 2026
TL;DR — HD beta is 1.04
The Home Depot, Inc. carries a current beta of 1.04 versus the S&P 500, which classifies it as market-like. Tracks the S&P 500 reasonably closely. Diversifies less than a defensive holding, but won't amplify drawdowns much either.
That means on a day the index moves 1%, HD historically tends to move roughly 1.04% in the same direction — although day-to-day correlation is noisy and only meaningful over rolling windows of several months.
What is beta and how is it calculated?
Beta is the slope of a regression line plotted from a stock's returns against the broader market's returns. We use the S&P 500 as the benchmark and monthly returns over a five-year window — the same methodology that backs the FMP "profile beta" field. A beta of 1.0 means a stock moves perfectly in line with the index. A beta of 2.0 means it has historically moved twice as much in either direction. A beta of 0.5 means it moves half as much. Beta below zero (negative) is rare and means the stock tends to move opposite to the market — gold miners and short-volatility ETFs sometimes show this pattern.
HD beta — rolling windows
1-Year beta
0.99
3-Year beta
1.02
5-Year beta
1.04
1Y/3Y values illustrated from current 5Y monthly beta. Full rolling windows ship with the upcoming risk-data ingest.
Volatility vs the S&P 500
Holding the S&P 500 has a beta of, by definition, 1.0. HD's beta of 1.04 implies its monthly returns are roughly comparable to the index. In a 10% market drawdown, history suggests HD would draw down by roughly 10.4%, all else equal. In a 10% rally it would tend to gain roughly 10.4%. Past performance is not a guarantee — beta is backwards-looking and can shift sharply after major business changes.
Portfolio implications
A market-like beta like HD's changes the role this stock can play in a portfolio:
- Position sizing: if you target a portfolio beta close to 1.0, you can hold a smaller dollar allocation of HD and still match the market's overall sensitivity.
- Pairing: pair HD with higher-beta growth names if you want more upside capture without losing the defensive ballast.
- Discount rate: HD's beta directly feeds the cost of equity in any DCF model. A higher beta raises required return and lowers fair value, so a high-beta growth story has to grow fast enough to justify the premium.
- Drawdown tolerance: if a 30% market sell-off would force you to trim, factor in that a market-like name like HD would historically draw down by 31% in that scenario.
Related HD analyses
Frequently asked about HD beta
What is HD's beta?↓
HD's current beta is 1.04, which puts it in the "Market-like" category. Tracks the S&P 500 reasonably closely. Diversifies less than a defensive holding, but won't amplify drawdowns much either.
What does beta actually measure?↓
Beta measures how a stock's returns move relative to the broader market (usually the S&P 500). A beta of 1.0 means the stock moves in lock-step with the market. A beta of 1.5 means it tends to move 1.5x as much in either direction. A beta below 1.0 means smaller swings; a beta below 0 means the stock often moves in the opposite direction.
How does HD's beta compare to its sector?↓
Consumer Cyclical stocks typically sit above 1.0 (above market). HD's reading of 1.04 is broadly in line with the typical pattern.
How should I use beta in portfolio construction?↓
Use beta to balance the overall risk profile of your portfolio. A high-beta concentrated portfolio amplifies returns in bull markets but can drawdown sharply. Mixing in low-beta names (utilities, staples, regulated industries) dampens swings. Beta also feeds the WACC discount rate in any DCF — a higher beta raises the cost of equity and lowers fair value, all else equal.
Is beta a measure of risk?↓
Beta is a measure of market-relative volatility, not of total risk. It does not capture business risk, accounting risk, regulatory risk, or governance risk. Use beta in combination with the Quality Triple Check (Piotroski / Beneish / Altman) on the fundamentals page to get a fuller risk picture.