Correlation Between Wal-Mart and SPORTING
Can any of the company-specific risk be diversified away by investing in both Wal-Mart and SPORTING 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 Wal-Mart and SPORTING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wal Mart de Mxico and SPORTING, you can compare the effects of market volatilities on Wal-Mart and SPORTING 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 Wal-Mart with a short position of SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal-Mart and SPORTING.
Diversification Opportunities for Wal-Mart and SPORTING
Average diversification
The 3 months correlation between Wal-Mart and SPORTING is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING and Wal-Mart 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 Wal Mart de Mxico are associated (or correlated) with SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of Wal-Mart i.e., Wal-Mart and SPORTING go up and down completely randomly.
Pair Corralation between Wal-Mart and SPORTING
Assuming the 90 days trading horizon Wal Mart de Mxico is expected to generate 5.34 times more return on investment than SPORTING. However, Wal-Mart is 5.34 times more volatile than SPORTING. It trades about 0.19 of its potential returns per unit of risk. SPORTING is currently generating about 0.21 per unit of risk. If you would invest 248.00 in Wal Mart de Mxico on September 13, 2024 and sell it today you would earn a total of 22.00 from holding Wal Mart de Mxico or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wal Mart de Mxico vs. SPORTING
Performance |
| Timeline |
| Wal Mart de |
| SPORTING |
Wal-Mart and SPORTING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wal-Mart and SPORTING
The main advantage of trading using opposite Wal-Mart and SPORTING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wal-Mart position performs unexpectedly, SPORTING 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 SPORTING will offset losses from the drop in SPORTING's long position.| Wal-Mart vs. COSMOSTEEL HLDGS | Wal-Mart vs. Tianjin Capital Environmental | Wal-Mart vs. Insteel Industries | Wal-Mart vs. BlueScope Steel Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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