Correlation Between Superior Plus and Wal-Mart
Can any of the company-specific risk be diversified away by investing in both Superior Plus and Wal-Mart 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 Superior Plus and Wal-Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Wal Mart de Mxico, you can compare the effects of market volatilities on Superior Plus and Wal-Mart 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 Superior Plus with a short position of Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Wal-Mart.
Diversification Opportunities for Superior Plus and Wal-Mart
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Wal-Mart is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and Superior Plus 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 Superior Plus Corp are associated (or correlated) with Wal-Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Superior Plus i.e., Superior Plus and Wal-Mart go up and down completely randomly.
Pair Corralation between Superior Plus and Wal-Mart
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Wal-Mart. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 3.42 times less risky than Wal-Mart. The stock trades about -0.07 of its potential returns per unit of risk. The Wal Mart de Mxico is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Wal Mart de Mxico on September 3, 2024 and sell it today you would earn a total of 138.00 from holding Wal Mart de Mxico or generate 127.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Wal Mart de Mxico
Performance |
| Timeline |
| Superior Plus Corp |
| Wal Mart de |
Superior Plus and Wal-Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Wal-Mart
The main advantage of trading using opposite Superior Plus and Wal-Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, Wal-Mart 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 Wal-Mart will offset losses from the drop in Wal-Mart's long position.| Superior Plus vs. Collins Foods Limited | Superior Plus vs. Thai Beverage Public | Superior Plus vs. ADRIATIC METALS LS 013355 | Superior Plus vs. Lifeway Foods |
| Wal-Mart vs. Walmart | Wal-Mart vs. Superior Plus Corp | Wal-Mart vs. NMI Holdings | Wal-Mart vs. Origin Agritech |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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