Correlation Between Walmart and Bank Leumi

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

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

Diversification Opportunities for Walmart and Bank Leumi

0.81

Correlation Coefficient

Walmart  Bank Leumi

Very poor diversification

The 3 months correlation between Walmart and Bank is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bank Leumi Le in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Leumi Le 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 Bank Leumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Leumi Le has no effect on the direction of Walmart i.e., Walmart and Bank Leumi go up and down completely randomly.

Pair Corralation between Walmart and Bank Leumi

If you would invest  8,060  in Walmart on September 13, 2024 and sell it today you would earn a total of  1,436  from holding Walmart or generate 17.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Walmart  vs.  Bank Leumi Le

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 comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bank Leumi Le

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Leumi Le has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Bank Leumi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walmart and Bank Leumi

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

The idea behind Walmart and Bank Leumi Le 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.