Correlation Between Walmart and Nationwide Building
Can any of the company-specific risk be diversified away by investing in both Walmart and Nationwide Building 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 Nationwide Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Nationwide Building Society, you can compare the effects of market volatilities on Walmart and Nationwide Building 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 Nationwide Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Nationwide Building.
Diversification Opportunities for Walmart and Nationwide Building
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Nationwide is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Nationwide Building Society in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Building 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 Nationwide Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Building has no effect on the direction of Walmart i.e., Walmart and Nationwide Building go up and down completely randomly.
Pair Corralation between Walmart and Nationwide Building
Assuming the 90 days trading horizon Walmart is expected to generate 0.39 times more return on investment than Nationwide Building. However, Walmart is 2.58 times less risky than Nationwide Building. It trades about 0.16 of its potential returns per unit of risk. Nationwide Building Society is currently generating about -0.26 per unit of risk. If you would invest 5,939 in Walmart on October 25, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Nationwide Building Society
Performance |
| Timeline |
| Walmart |
| Nationwide Building |
Walmart and Nationwide Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Nationwide Building
The main advantage of trading using opposite Walmart and Nationwide Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Nationwide Building 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 Nationwide Building will offset losses from the drop in Nationwide Building's long position.| Walmart vs. Spire Healthcare Group | Walmart vs. Eco Animal Health | Walmart vs. JLEN Environmental Assets | Walmart vs. Foresight Environmental Infrastructure |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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