Correlation Between Walmart and Fobi AI

Can any of the company-specific risk be diversified away by investing in both Walmart and Fobi AI 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 Fobi AI 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 Fobi AI, you can compare the effects of market volatilities on Walmart and Fobi AI 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 Fobi AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fobi AI.

Diversification Opportunities for Walmart and Fobi AI

-0.61

Correlation Coefficient

Walmart  Fobi AI

Excellent diversification

The 3 months correlation between Walmart and Fobi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI 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 Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Walmart i.e., Walmart and Fobi AI go up and down completely randomly.

Pair Corralation between Walmart and Fobi AI

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.23 times more return on investment than Fobi AI. However, Walmart Inc CDR is 4.37 times less risky than Fobi AI. It trades about 0.23 of its potential returns per unit of risk. Fobi AI is currently generating about -0.11 per unit of risk. If you would invest  3,508  in Walmart Inc CDR on September 16, 2024 and sell it today you would earn a total of  591.00  from holding Walmart Inc CDR or generate 16.85% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Fobi AI

Walmart Inc CDR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Fobi AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fobi AI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Walmart and Fobi AI

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

The idea behind Walmart Inc CDR and Fobi AI 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.