Correlation Between Volkswagen and Walmart
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Walmart, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Walmart.
Diversification Opportunities for Volkswagen and Walmart
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Walmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Volkswagen 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 Volkswagen 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 Volkswagen i.e., Volkswagen and Walmart go up and down completely randomly.
Pair Corralation between Volkswagen and Walmart
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 9.56 times less risky than Walmart. The stock trades about -0.07 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 | 99.5% |
| Values | Daily Returns |
Volkswagen AG vs. Walmart
Performance |
| Timeline |
| Volkswagen AG |
| Walmart |
Volkswagen and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Walmart
The main advantage of trading using opposite Volkswagen and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. Amedeo Air Four | Volkswagen vs. Associated British Foods | Volkswagen vs. Alaska Air Group | Volkswagen 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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