Correlation Between Wal Mart and Wal Mart

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

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

Diversification Opportunities for Wal Mart and Wal Mart

0.89

Correlation Coefficient

Wal Mart  Wal Mart

Very poor diversification

The 3 months correlation between Wal and Wal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de and Wal Mart de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and Wal Mart 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 Wal Mart de are associated (or correlated) with Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Wal Mart i.e., Wal Mart and Wal Mart go up and down completely randomly.

Pair Corralation between Wal Mart and Wal Mart

Assuming the 90 days horizon Wal Mart is expected to generate 2.62 times less return on investment than Wal Mart. But when comparing it to its historical volatility, Wal Mart de is 1.5 times less risky than Wal Mart. It trades about 0.15 of its potential returns per unit of risk. Wal Mart de is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Wal Mart de on September 28, 2024 and sell it today you would earn a total of  45.00  from holding Wal Mart de or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Wal Mart de  vs.  Wal Mart de

Wal Mart de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wal Mart de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wal Mart is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wal Mart de

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Wal Mart is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wal Mart and Wal Mart

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

The idea behind Wal Mart de and Wal Mart de 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.