Correlation Between Arhaus and Walmart
Can any of the company-specific risk be diversified away by investing in both Arhaus 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 Arhaus and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arhaus Inc and Walmart, you can compare the effects of market volatilities on Arhaus 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 Arhaus with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arhaus and Walmart.
Diversification Opportunities for Arhaus and Walmart
Very good diversification
The 3 months correlation between Arhaus and Walmart is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Arhaus Inc and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Arhaus 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 Arhaus Inc 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 Arhaus i.e., Arhaus and Walmart go up and down completely randomly.
Pair Corralation between Arhaus and Walmart
Given the investment horizon of 90 days Arhaus is expected to generate 2.85 times less return on investment than Walmart. In addition to that, Arhaus is 3.06 times more volatile than Walmart. It trades about 0.02 of its total potential returns per unit of risk. Walmart is currently generating about 0.16 per unit of volatility. If you would invest 5,161 in Walmart on September 12, 2024 and sell it today you would earn a total of 4,294 from holding Walmart or generate 83.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arhaus Inc vs. Walmart
Performance |
| Timeline |
| Arhaus Inc |
| Walmart |
Arhaus and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arhaus and Walmart
The main advantage of trading using opposite Arhaus and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arhaus 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.| Arhaus vs. Victory Integrity Smallmid Cap | Arhaus vs. Hilton Worldwide Holdings | Arhaus vs. NVIDIA | Arhaus vs. JPMorgan Chase Co |
| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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