Correlation Between Walmart and Orbia Advance

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

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

Diversification Opportunities for Walmart and Orbia Advance

-0.73

Correlation Coefficient

Walmart  Orbia Advance

Pay attention - limited upside

The 3 months correlation between Walmart and Orbia is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Orbia Advance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbia Advance 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 Orbia Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbia Advance has no effect on the direction of Walmart i.e., Walmart and Orbia Advance go up and down completely randomly.

Pair Corralation between Walmart and Orbia Advance

Assuming the 90 days trading horizon Walmart is expected to generate 0.59 times more return on investment than Orbia Advance. However, Walmart is 1.69 times less risky than Orbia Advance. It trades about 0.25 of its potential returns per unit of risk. Orbia Advance is currently generating about -0.09 per unit of risk. If you would invest  153,500  in Walmart on August 31, 2024 and sell it today you would earn a total of  35,208  from holding Walmart or generate 22.94% return on investment over 90 days.

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

Walmart  vs.  Orbia Advance

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Orbia Advance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbia Advance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Walmart and Orbia Advance

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

The idea behind Walmart and Orbia Advance 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 Global Correlations module to find global opportunities by holding instruments from different markets.