Correlation Between Walmart and Post Holdings

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

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

Diversification Opportunities for Walmart and Post Holdings

0.89

Correlation Coefficient

Walmart  Post Holdings

Very poor diversification

The 3 months correlation between Walmart and Post is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Post Holdings Partnering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post Holdings Partnering 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 Post Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post Holdings Partnering has no effect on the direction of Walmart i.e., Walmart and Post Holdings go up and down completely randomly.

Pair Corralation between Walmart and Post Holdings

If you would invest  7,886  in Walmart on September 18, 2024 and sell it today you would earn a total of  1,601  from holding Walmart or generate 20.3% return on investment over 90 days.

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

Walmart  vs.  Post Holdings Partnering

Walmart

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) 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.

Post Holdings Partnering

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and Post Holdings

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

The idea behind Walmart and Post Holdings Partnering 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.