Correlation Between BBVA Banco and Walmart
Can any of the company-specific risk be diversified away by investing in both BBVA Banco 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 BBVA Banco and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBVA Banco Frances and Walmart, you can compare the effects of market volatilities on BBVA Banco 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 BBVA Banco with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBVA Banco and Walmart.
Diversification Opportunities for BBVA Banco and Walmart
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BBVA and Walmart is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BBVA Banco Frances and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and BBVA Banco 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 BBVA Banco Frances 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 BBVA Banco i.e., BBVA Banco and Walmart go up and down completely randomly.
Pair Corralation between BBVA Banco and Walmart
Assuming the 90 days trading horizon BBVA Banco Frances is expected to generate 3.74 times more return on investment than Walmart. However, BBVA Banco is 3.74 times more volatile than Walmart. It trades about 0.3 of its potential returns per unit of risk. Walmart is currently generating about 0.07 per unit of risk. If you would invest 667,000 in BBVA Banco Frances on October 20, 2024 and sell it today you would earn a total of 196,000 from holding BBVA Banco Frances or generate 29.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BBVA Banco Frances vs. Walmart
Performance |
| Timeline |
| BBVA Banco Frances |
| Walmart |
BBVA Banco and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBVA Banco and Walmart
The main advantage of trading using opposite BBVA Banco and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBVA Banco 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.| BBVA Banco vs. American Express Co | BBVA Banco vs. QUALCOMM Incorporated | BBVA Banco vs. United States Steel | BBVA Banco vs. Pfizer Inc |
| Walmart vs. United States Steel | Walmart vs. Telecom Argentina | Walmart vs. Transportadora de Gas | Walmart vs. Agrometal SAI |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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