Correlation Between Walmart and Signal Hill

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

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

Diversification Opportunities for Walmart and Signal Hill

-0.49

Correlation Coefficient

Walmart  Signal Hill

Very good diversification

The 3 months correlation between Walmart and Signal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Signal Hill Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signal Hill 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 Signal Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signal Hill Acquisition has no effect on the direction of Walmart i.e., Walmart and Signal Hill go up and down completely randomly.

Pair Corralation between Walmart and Signal Hill

Considering the 90-day investment horizon Walmart is expected to generate 143.61 times less return on investment than Signal Hill. But when comparing it to its historical volatility, Walmart is 86.67 times less risky than Signal Hill. It trades about 0.14 of its potential returns per unit of risk. Signal Hill Acquisition is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  0.49  in Signal Hill Acquisition on September 14, 2024 and sell it today you would lose (0.40) from holding Signal Hill Acquisition or give up 81.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	14.95%
Values	Daily Returns

Walmart  vs.  Signal Hill Acquisition

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) 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.

Signal Hill Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signal Hill Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Signal Hill is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and Signal Hill

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

The idea behind Walmart and Signal Hill 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.