Correlation Between Walmart and Guararapes Confeces

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

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

Diversification Opportunities for Walmart and Guararapes Confeces

-0.68

Correlation Coefficient

Walmart  Guararapes Confeces

Excellent diversification

The 3 months correlation between Walmart and Guararapes is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Guararapes Confeces SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guararapes Confeces and Walmart 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 Walmart are associated (or correlated) with Guararapes Confeces. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guararapes Confeces has no effect on the direction of Walmart i.e., Walmart and Guararapes Confeces go up and down completely randomly.

Pair Corralation between Walmart and Guararapes Confeces

Assuming the 90 days trading horizon Walmart is expected to generate 0.33 times more return on investment than Guararapes Confeces. However, Walmart is 3.06 times less risky than Guararapes Confeces. It trades about 0.3 of its potential returns per unit of risk. Guararapes Confeces SA is currently generating about -0.07 per unit of risk. If you would invest  2,703  in Walmart on September 27, 2024 and sell it today you would earn a total of  803.00  from holding Walmart or generate 29.71% return on investment over 90 days.

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

Walmart  vs.  Guararapes Confeces SA

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Walmart sustained solid returns over the last few months and may actually be approaching a breakup point.

Guararapes Confeces

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guararapes Confeces SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Walmart and Guararapes Confeces

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

The idea behind Walmart and Guararapes Confeces SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.