Correlation Between Walmart and UPM-Kymmene Oyj

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

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

Diversification Opportunities for Walmart and UPM-Kymmene Oyj

-0.87

Correlation Coefficient

Walmart  UPM-Kymmene Oyj

Pay attention - limited upside

The 3 months correlation between Walmart and UPM-Kymmene is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj 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 UPM-Kymmene Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of Walmart i.e., Walmart and UPM-Kymmene Oyj go up and down completely randomly.

Pair Corralation between Walmart and UPM-Kymmene Oyj

Considering the 90-day investment horizon Walmart is expected to generate 0.3 times more return on investment than UPM-Kymmene Oyj. However, Walmart is 3.3 times less risky than UPM-Kymmene Oyj. It trades about 0.26 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.1 per unit of risk. If you would invest  7,723  in Walmart on August 30, 2024 and sell it today you would earn a total of  1,465  from holding Walmart or generate 18.97% return on investment over 90 days.

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

Walmart  vs.  UPM Kymmene Oyj

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

UPM Kymmene Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UPM Kymmene Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and UPM-Kymmene Oyj

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

The idea behind Walmart and UPM Kymmene Oyj 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.