Correlation Between Walmart and Khosla Ventures

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

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

Diversification Opportunities for Walmart and Khosla Ventures

0.77

Correlation Coefficient

Walmart  Khosla Ventures

Poor diversification

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

Pair Corralation between Walmart and Khosla Ventures

If you would invest  9,111  in Walmart on September 27, 2024 and sell it today you would earn a total of  168.00  from holding Walmart or generate 1.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Walmart  vs.  Khosla Ventures Acquisition

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) 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.

Khosla Ventures Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Khosla Ventures Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Khosla Ventures is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Khosla Ventures

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

The idea behind Walmart and Khosla Ventures 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.