Correlation Between Walmart and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Walmart and AMG Advanced 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 AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Walmart and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and AMG Advanced.
Diversification Opportunities for Walmart and AMG Advanced
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and AMG is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Walmart i.e., Walmart and AMG Advanced go up and down completely randomly.
Pair Corralation between Walmart and AMG Advanced
Assuming the 90 days trading horizon Walmart is expected to generate 0.02 times more return on investment than AMG Advanced. However, Walmart is 45.75 times less risky than AMG Advanced. It trades about 0.13 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.11 per unit of risk. If you would invest 5,939 in Walmart on October 12, 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 Against |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Walmart vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Walmart |
| AMG Advanced Metallu |
Walmart and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and AMG Advanced
The main advantage of trading using opposite Walmart and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Walmart vs. Baker Steel Resources | Walmart vs. Morgan Advanced Materials | Walmart vs. Dentsply Sirona | Walmart vs. Foresight Environmental Infrastructure |
| AMG Advanced vs. Walmart | AMG Advanced vs. BYD Co | AMG Advanced vs. Volkswagen AG | AMG Advanced 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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