Correlation Between Target Corp and Walmart
Can any of the company-specific risk be diversified away by investing in both Target Corp and Walmart 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 Target Corp and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Corp and Walmart, you can compare the effects of market volatilities on Target Corp and Walmart 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 Target Corp with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Corp and Walmart.
Diversification Opportunities for Target Corp and Walmart
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Target and Walmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Target Corp and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Target Corp 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 Target Corp are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Target Corp i.e., Target Corp and Walmart go up and down completely randomly.
Pair Corralation between Target Corp and Walmart
Assuming the 90 days trading horizon Target Corp is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Target Corp is 6.42 times less risky than Walmart. The stock trades about -0.01 of its potential returns per unit of risk. The Walmart is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,380 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,580 from holding Walmart or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Target Corp vs. Walmart
Performance |
| Timeline |
| Target Corp |
| Walmart |
Target Corp and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Corp and Walmart
The main advantage of trading using opposite Target Corp and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Corp position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Target Corp vs. Leroy Seafood Group | Target Corp vs. Axfood AB | Target Corp vs. BW Offshore | Target Corp vs. Delta Air Lines |
| Walmart vs. Lendinvest PLC | Walmart vs. Neometals | Walmart vs. Albion Technology General | Walmart vs. Jupiter Fund Management |
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 Stocks Directory module to find actively traded stocks across global markets.
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