Correlation Between Walmart and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Walmart and Hon Hai 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 Hon Hai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Hon Hai Precision, you can compare the effects of market volatilities on Walmart and Hon Hai 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 Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Hon Hai.
Diversification Opportunities for Walmart and Hon Hai
Excellent diversification
The 3 months correlation between Walmart and Hon is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision 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 Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Walmart i.e., Walmart and Hon Hai go up and down completely randomly.
Pair Corralation between Walmart and Hon Hai
Assuming the 90 days trading horizon Walmart is expected to generate 7.81 times more return on investment than Hon Hai. However, Walmart is 7.81 times more volatile than Hon Hai Precision. It trades about 0.05 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.07 per unit of risk. If you would invest 4,328 in Walmart on September 24, 2024 and sell it today you would earn a total of 1,632 from holding Walmart or generate 37.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Walmart vs. Hon Hai Precision
Performance |
| Timeline |
| Walmart |
| Hon Hai Precision |
Walmart and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Hon Hai
The main advantage of trading using opposite Walmart and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai's long position.| Walmart vs. GlobalData PLC | Walmart vs. Science in Sport | Walmart vs. Automatic Data Processing | Walmart vs. Erste Group Bank |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |