Correlation Between Walmart and Brookfield
Can any of the company-specific risk be diversified away by investing in both Walmart and Brookfield 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 Brookfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart Inc CDR and Brookfield, you can compare the effects of market volatilities on Walmart and Brookfield 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 Brookfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Brookfield.
Diversification Opportunities for Walmart and Brookfield
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and Brookfield is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Brookfield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield 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 Inc CDR are associated (or correlated) with Brookfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield has no effect on the direction of Walmart i.e., Walmart and Brookfield go up and down completely randomly.
Pair Corralation between Walmart and Brookfield
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.64 times more return on investment than Brookfield. However, Walmart is 1.64 times more volatile than Brookfield. It trades about 0.21 of its potential returns per unit of risk. Brookfield is currently generating about 0.17 per unit of risk. If you would invest 3,479 in Walmart Inc CDR on September 26, 2024 and sell it today you would earn a total of 537.00 from holding Walmart Inc CDR or generate 15.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Walmart Inc CDR vs. Brookfield
Performance |
Timeline |
Walmart Inc CDR |
Brookfield |
Walmart and Brookfield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and Brookfield
The main advantage of trading using opposite Walmart and Brookfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Brookfield 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 Brookfield will offset losses from the drop in Brookfield's long position.Walmart vs. Canadian Tire | Walmart vs. Loblaw Companies Limited | Walmart vs. Metro Inc | Walmart vs. Restaurant Brands International |
Brookfield vs. Champion Gaming Group | Brookfield vs. Canaf Investments | Brookfield vs. Atrium Mortgage Investment | Brookfield vs. East Side Games |
Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |