Correlation Between Walmart and Cars
Can any of the company-specific risk be diversified away by investing in both Walmart and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Cars Inc, you can compare the effects of market volatilities on Walmart and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cars.
Diversification Opportunities for Walmart and Cars
Significant diversification
The 3 months correlation between Walmart and Cars is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Walmart i.e., Walmart and Cars go up and down completely randomly.
Pair Corralation between Walmart and Cars
Assuming the 90 days trading horizon Walmart is expected to generate 0.03 times more return on investment than Cars. However, Walmart is 29.91 times less risky than Cars. It trades about 0.23 of its potential returns per unit of risk. Cars Inc is currently generating about -0.36 per unit of risk. If you would invest 5,939 in Walmart on October 10, 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 | Insignificant |
| Accuracy | 63.16% |
| Values | Daily Returns |
Walmart vs. Cars Inc
Performance |
| Timeline |
| Walmart |
| Cars Inc |
Walmart and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Cars
The main advantage of trading using opposite Walmart and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Walmart vs. Anglesey Mining | Walmart vs. Litigation Capital Management | Walmart vs. Auto Trader Group | Walmart vs. PPHE Hotel Group |
| Cars vs. Diversified Energy | Cars vs. Jacquet Metal Service | Cars vs. Flow Traders NV | Cars vs. Smithson Investment 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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