Correlation Between Walmart and 126307BK2

Can any of the company-specific risk be diversified away by investing in both Walmart and 126307BK2 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 126307BK2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and US126307BK24, you can compare the effects of market volatilities on Walmart and 126307BK2 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 126307BK2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 126307BK2.

Diversification Opportunities for Walmart and 126307BK2

0.76

Correlation Coefficient

Walmart  126307BK2

Poor diversification

The 3 months correlation between Walmart and 126307BK2 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and US126307BK24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US126307BK24 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 126307BK2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US126307BK24 has no effect on the direction of Walmart i.e., Walmart and 126307BK2 go up and down completely randomly.

Pair Corralation between Walmart and 126307BK2

Considering the 90-day investment horizon Walmart is expected to generate 2.42 times less return on investment than 126307BK2. But when comparing it to its historical volatility, Walmart is 3.25 times less risky than 126307BK2. It trades about 0.26 of its potential returns per unit of risk. US126307BK24 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,650  in US126307BK24 on September 12, 2024 and sell it today you would earn a total of  1,021  from holding US126307BK24 or generate 21.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.0%
Values	Daily Returns

Walmart  vs.  US126307BK24

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 uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

US126307BK24

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US126307BK24 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 126307BK2 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and 126307BK2

The main advantage of trading using opposite Walmart and 126307BK2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 126307BK2 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 126307BK2 will offset losses from the drop in 126307BK2's long position.

The idea behind Walmart and US126307BK24 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..