Correlation Between Walmart and Blue World

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

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

Diversification Opportunities for Walmart and Blue World

-0.87

Correlation Coefficient

Walmart  Blue World

Pay attention - limited upside

The 3 months correlation between Walmart and Blue is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Blue World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue World Acquisition 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 Blue World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue World Acquisition has no effect on the direction of Walmart i.e., Walmart and Blue World go up and down completely randomly.

Pair Corralation between Walmart and Blue World

If you would invest  7,696  in Walmart on September 5, 2024 and sell it today you would earn a total of  1,749  from holding Walmart or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Walmart  vs.  Blue World Acquisition

Walmart

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blue World Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue World Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blue World is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and Blue World

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

The idea behind Walmart and Blue World Acquisition 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.