Correlation Between SMA Solar and Walmart
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Walmart, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Walmart.
Diversification Opportunities for SMA Solar and Walmart
Modest diversification
The 3 months correlation between SMA and Walmart is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Walmart go up and down completely randomly.
Pair Corralation between SMA Solar and Walmart
Assuming the 90 days trading horizon SMA Solar Technology is expected to under-perform the Walmart. In addition to that, SMA Solar is 89.6 times more volatile than Walmart. It trades about -0.03 of its total potential returns per unit of risk. Walmart is currently generating about 0.13 per unit of volatility. If you would invest 5,939 in Walmart on October 27, 2024 and sell it today you would earn a total of 21.00 from holding Walmart or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Walmart
Performance |
| Timeline |
| SMA Solar Technology |
| Walmart |
SMA Solar and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Walmart
The main advantage of trading using opposite SMA Solar and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Axfood AB | SMA Solar vs. Grieg Seafood | SMA Solar vs. Dairy Farm International | SMA Solar vs. Futura Medical |
| Walmart vs. Creo Medical Group | Walmart vs. National Beverage Corp | Walmart vs. Darden Restaurants | Walmart vs. Medical Properties Trust |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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