Correlation Between Walmart and Jardine Cycle

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

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

Diversification Opportunities for Walmart and Jardine Cycle

-0.67

Correlation Coefficient

Walmart  Jardine Cycle

Excellent diversification

The 3 months correlation between Walmart and Jardine is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Jardine Cycle Carriage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jardine Cycle Carriage 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 Jardine Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jardine Cycle Carriage has no effect on the direction of Walmart i.e., Walmart and Jardine Cycle go up and down completely randomly.

Pair Corralation between Walmart and Jardine Cycle

Considering the 90-day investment horizon Walmart is expected to generate 0.76 times more return on investment than Jardine Cycle. However, Walmart is 1.32 times less risky than Jardine Cycle. It trades about 0.29 of its potential returns per unit of risk. Jardine Cycle Carriage is currently generating about -0.1 per unit of risk. If you would invest  7,696  in Walmart on September 5, 2024 and sell it today you would earn a total of  1,655  from holding Walmart or generate 21.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Walmart  vs.  Jardine Cycle Carriage

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) 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.

Jardine Cycle Carriage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jardine Cycle Carriage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Walmart and Jardine Cycle

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

The idea behind Walmart and Jardine Cycle Carriage 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.