Correlation Between Walmart and Ault Alliance

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

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

Diversification Opportunities for Walmart and Ault Alliance

-0.77

Correlation Coefficient

Walmart  Ault Alliance

Pay attention - limited upside

The 3 months correlation between Walmart and Ault is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ault Alliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ault Alliance 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 Ault Alliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ault Alliance has no effect on the direction of Walmart i.e., Walmart and Ault Alliance go up and down completely randomly.

Pair Corralation between Walmart and Ault Alliance

Considering the 90-day investment horizon Walmart is expected to generate 2.73 times less return on investment than Ault Alliance. But when comparing it to its historical volatility, Walmart is 5.59 times less risky than Ault Alliance. It trades about 0.26 of its potential returns per unit of risk. Ault Alliance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Ault Alliance on August 30, 2024 and sell it today you would earn a total of  1.00  from holding Ault Alliance or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	12.7%
Values	Daily Returns

Walmart  vs.  Ault Alliance

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ault Alliance

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ault Alliance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively conflicting essential indicators, Ault Alliance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Ault Alliance

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

The idea behind Walmart and Ault Alliance 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.