Correlation Between Walmart and United Parcel
Can any of the company-specific risk be diversified away by investing in both Walmart and United Parcel 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 United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and United Parcel Service, you can compare the effects of market volatilities on Walmart and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and United Parcel.
Diversification Opportunities for Walmart and United Parcel
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Walmart i.e., Walmart and United Parcel go up and down completely randomly.
Pair Corralation between Walmart and United Parcel
Assuming the 90 days trading horizon Walmart is expected to generate 9.8 times more return on investment than United Parcel. However, Walmart is 9.8 times more volatile than United Parcel Service. It trades about 0.05 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.02 per unit of risk. 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 | 99.24% |
| Values | Daily Returns |
Walmart vs. United Parcel Service
Performance |
| Timeline |
| Walmart |
| United Parcel Service |
Walmart and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and United Parcel
The main advantage of trading using opposite Walmart and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Walmart vs. Lendinvest PLC | Walmart vs. Neometals | Walmart vs. Albion Technology General | Walmart vs. Jupiter Fund Management |
| United Parcel vs. Charter Communications Cl | United Parcel vs. Worldwide Healthcare Trust | United Parcel vs. Target Healthcare REIT | United Parcel vs. Primary Health Properties |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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