Correlation Between Apple and Walmart
Can any of the company-specific risk be diversified away by investing in both Apple and Walmart 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 Apple and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc DRC and Walmart, you can compare the effects of market volatilities on Apple and Walmart 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 Apple with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Walmart.
Diversification Opportunities for Apple and Walmart
Significant diversification
The 3 months correlation between Apple and Walmart is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc DRC and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Apple 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 Apple Inc DRC are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Apple i.e., Apple and Walmart go up and down completely randomly.
Pair Corralation between Apple and Walmart
Assuming the 90 days trading horizon Apple Inc DRC is expected to generate 1.05 times more return on investment than Walmart. However, Apple is 1.05 times more volatile than Walmart. It trades about 0.44 of its potential returns per unit of risk. Walmart is currently generating about 0.38 per unit of risk. If you would invest 1,275,000 in Apple Inc DRC on September 19, 2024 and sell it today you would earn a total of 180,000 from holding Apple Inc DRC or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Apple Inc DRC vs. Walmart
Performance |
| Timeline |
| Apple Inc DRC |
| Walmart |
Apple and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Walmart
The main advantage of trading using opposite Apple and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Apple vs. Agrometal SAI | Apple vs. American Express Co | Apple vs. QUALCOMM Incorporated | Apple vs. United States Steel |
| Walmart vs. Compania de Transporte | Walmart vs. Harmony Gold Mining | Walmart vs. Agrometal SAI | Walmart vs. United States Steel |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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