Correlation Between Walmart and Maven Brands

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

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

Diversification Opportunities for Walmart and Maven Brands

-0.37

Correlation Coefficient

Walmart  Maven Brands

Very good diversification

The 3 months correlation between Walmart and Maven is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Maven Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maven Brands 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 Maven Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maven Brands has no effect on the direction of Walmart i.e., Walmart and Maven Brands go up and down completely randomly.

Pair Corralation between Walmart and Maven Brands

Considering the 90-day investment horizon Walmart is expected to generate 0.05 times more return on investment than Maven Brands. However, Walmart is 20.01 times less risky than Maven Brands. It trades about 0.49 of its potential returns per unit of risk. Maven Brands is currently generating about -0.22 per unit of risk. If you would invest  8,406  in Walmart on September 16, 2024 and sell it today you would earn a total of  1,019  from holding Walmart or generate 12.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Walmart  vs.  Maven Brands

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.

Maven Brands

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maven Brands are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Maven Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Maven Brands

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

The idea behind Walmart and Maven Brands 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.