Correlation Between Walmart and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Walmart and Discover Financial 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 Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Discover Financial Services, you can compare the effects of market volatilities on Walmart and Discover Financial 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 Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Discover Financial.
Diversification Opportunities for Walmart and Discover Financial
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walmart and Discover is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial 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 Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Walmart i.e., Walmart and Discover Financial go up and down completely randomly.
Pair Corralation between Walmart and Discover Financial
If you would invest 5,960 in Walmart on October 14, 2024 and sell it today you would earn a total of 0.00 from holding Walmart or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Walmart vs. Discover Financial Services
Performance |
| Timeline |
| Walmart |
| Discover Financial |
Walmart and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Discover Financial
The main advantage of trading using opposite Walmart and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Discover Financial 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 Discover Financial will offset losses from the drop in Discover Financial's long position.| Walmart vs. Micron Technology | Walmart vs. Check Point Software | Walmart vs. International Biotechnology Trust | Walmart vs. SMA Solar Technology |
| Discover Financial vs. Walmart | Discover Financial vs. BYD Co | Discover Financial vs. Volkswagen AG | Discover Financial vs. Volkswagen AG Non Vtg |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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