Correlation Between Walmart and Iconic Sports

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

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

Diversification Opportunities for Walmart and Iconic Sports

0.92

Correlation Coefficient

Walmart  Iconic Sports

Almost no diversification

The 3 months correlation between Walmart and Iconic is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Iconic Sports Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iconic Sports 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 Iconic Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iconic Sports Acquisition has no effect on the direction of Walmart i.e., Walmart and Iconic Sports go up and down completely randomly.

Pair Corralation between Walmart and Iconic Sports

If you would invest  8,057  in Walmart on September 28, 2024 and sell it today you would earn a total of  1,222  from holding Walmart or generate 15.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.61%
Values	Daily Returns

Walmart  vs.  Iconic Sports Acquisition

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) 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.

Iconic Sports Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iconic Sports Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Iconic Sports is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and Iconic Sports

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

The idea behind Walmart and Iconic Sports 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.