Correlation Between Walmart and H1II34

Can any of the company-specific risk be diversified away by investing in both Walmart and H1II34 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 H1II34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and H1II34, you can compare the effects of market volatilities on Walmart and H1II34 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 H1II34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and H1II34.

Diversification Opportunities for Walmart and H1II34

-0.71

Correlation Coefficient

Walmart  H1II34

Pay attention - limited upside

The 3 months correlation between Walmart and H1II34 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and H1II34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H1II34 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 H1II34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H1II34 has no effect on the direction of Walmart i.e., Walmart and H1II34 go up and down completely randomly.

Pair Corralation between Walmart and H1II34

Assuming the 90 days trading horizon Walmart is expected to generate 0.31 times more return on investment than H1II34. However, Walmart is 3.21 times less risky than H1II34. It trades about 0.25 of its potential returns per unit of risk. H1II34 is currently generating about -0.07 per unit of risk. If you would invest  2,979  in Walmart on September 23, 2024 and sell it today you would earn a total of  507.00  from holding Walmart or generate 17.02% return on investment over 90 days.

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

Walmart  vs.  H1II34

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) 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.

H1II34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H1II34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Walmart and H1II34

The main advantage of trading using opposite Walmart and H1II34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, H1II34 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 H1II34 will offset losses from the drop in H1II34's long position.

The idea behind Walmart and H1II34 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.