Correlation Between Walmart and Marks
Can any of the company-specific risk be diversified away by investing in both Walmart and Marks 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 Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Marks and Spencer, you can compare the effects of market volatilities on Walmart and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Marks.
Diversification Opportunities for Walmart and Marks
Good diversification
The 3 months correlation between Walmart and Marks is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Walmart i.e., Walmart and Marks go up and down completely randomly.
Pair Corralation between Walmart and Marks
Assuming the 90 days trading horizon Walmart is expected to generate 9.36 times more return on investment than Marks. However, Walmart is 9.36 times more volatile than Marks and Spencer. It trades about 0.05 of its potential returns per unit of risk. Marks and Spencer is currently generating about 0.1 per unit of risk. If you would invest 4,328 in Walmart on October 14, 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 | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Walmart vs. Marks and Spencer
Performance |
| Timeline |
| Walmart |
| Marks and Spencer |
Walmart and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Marks
The main advantage of trading using opposite Walmart and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Walmart vs. Micron Technology | Walmart vs. Check Point Software | Walmart vs. International Biotechnology Trust | Walmart vs. SMA Solar Technology |
| Marks vs. Atresmedia | Marks vs. Cairo Communication SpA | Marks vs. Zinc Media Group | Marks vs. Gaming Realms plc |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |