Correlation Between Rheinmetall and Walmart
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Walmart, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Walmart.
Diversification Opportunities for Rheinmetall and Walmart
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rheinmetall and Walmart is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Rheinmetall 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 Rheinmetall AG 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 Rheinmetall i.e., Rheinmetall and Walmart go up and down completely randomly.
Pair Corralation between Rheinmetall and Walmart
Assuming the 90 days trading horizon Rheinmetall is expected to generate 3.63 times less return on investment than Walmart. But when comparing it to its historical volatility, Rheinmetall AG is 8.59 times less risky than Walmart. It trades about 0.12 of its potential returns per unit of risk. Walmart is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,328 in Walmart on October 11, 2024 and sell it today you would earn a total of 1,632 from holding Walmart or generate 37.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Rheinmetall AG vs. Walmart
Performance |
| Timeline |
| Rheinmetall AG |
| Walmart |
Rheinmetall and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Walmart
The main advantage of trading using opposite Rheinmetall and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Walmart | Rheinmetall vs. BYD Co | Rheinmetall vs. Volkswagen AG | Rheinmetall vs. Volkswagen AG Non Vtg |
| Walmart vs. MT Bank Corp | Walmart vs. Rosslyn Data Technologies | Walmart vs. Moneta Money Bank | Walmart vs. Bloomsbury Publishing Plc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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