Correlation Between Banco Bilbao and Walmart

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

By analyzing existing cross correlation between Banco Bilbao Vizcaya and Walmart, you can compare the effects of market volatilities on Banco Bilbao and Walmart 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 Banco Bilbao with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Walmart.

Diversification Opportunities for Banco Bilbao and Walmart

-0.42

Correlation Coefficient

Banco Bilbao  Walmart

Very good diversification

The 3 months correlation between Banco and Walmart is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Banco Bilbao 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 Banco Bilbao Vizcaya are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Walmart go up and down completely randomly.

Pair Corralation between Banco Bilbao and Walmart

Assuming the 90 days trading horizon Banco Bilbao is expected to generate 1.13 times less return on investment than Walmart. In addition to that, Banco Bilbao is 1.44 times more volatile than Walmart. It trades about 0.07 of its total potential returns per unit of risk. Walmart is currently generating about 0.12 per unit of volatility. If you would invest  91,558  in Walmart on September 27, 2024 and sell it today you would earn a total of  95,272  from holding Walmart or generate 104.06% return on investment over 90 days.

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

Banco Bilbao Vizcaya  vs.  Walmart

Banco Bilbao Vizcaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco Bilbao Vizcaya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Banco Bilbao and Walmart

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

The idea behind Banco Bilbao Vizcaya and Walmart 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.