Correlation Between BlueScope Steel and Wal-Mart
Can any of the company-specific risk be diversified away by investing in both BlueScope Steel 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 BlueScope Steel and Wal-Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlueScope Steel Limited and Wal Mart de Mxico, you can compare the effects of market volatilities on BlueScope Steel 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 BlueScope Steel with a short position of Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlueScope Steel and Wal-Mart.
Diversification Opportunities for BlueScope Steel and Wal-Mart
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BlueScope and Wal-Mart is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BlueScope Steel Limited 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 BlueScope Steel 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 BlueScope Steel Limited 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 BlueScope Steel i.e., BlueScope Steel and Wal-Mart go up and down completely randomly.
Pair Corralation between BlueScope Steel and Wal-Mart
Assuming the 90 days horizon BlueScope Steel is expected to generate 104.57 times less return on investment than Wal-Mart. But when comparing it to its historical volatility, BlueScope Steel Limited is 6.07 times less risky than Wal-Mart. It trades about 0.01 of its potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Wal Mart de Mxico on September 13, 2024 and sell it today you would earn a total of 178.00 from holding Wal Mart de Mxico or generate 193.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlueScope Steel Limited vs. Wal Mart de Mxico
Performance |
| Timeline |
| BlueScope Steel |
| Wal Mart de |
BlueScope Steel and Wal-Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlueScope Steel and Wal-Mart
The main advantage of trading using opposite BlueScope Steel and Wal-Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlueScope Steel 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.| BlueScope Steel vs. United Insurance Holdings | BlueScope Steel vs. Insurance Australia Group | BlueScope Steel vs. LPKF Laser Electronics | BlueScope Steel vs. Ping An Insurance |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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