Correlation Between BM European and Walmart
Can any of the company-specific risk be diversified away by investing in both BM European 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 BM European and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BM European Value and Walmart, you can compare the effects of market volatilities on BM European 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 BM European with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of BM European and Walmart.
Diversification Opportunities for BM European and Walmart
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BMRPF and Walmart is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BM European Value and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and BM European 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 BM European Value 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 BM European i.e., BM European and Walmart go up and down completely randomly.
Pair Corralation between BM European and Walmart
Assuming the 90 days horizon BM European Value is expected to under-perform the Walmart. In addition to that, BM European is 3.63 times more volatile than Walmart. It trades about -0.14 of its total potential returns per unit of risk. Walmart is currently generating about 0.4 per unit of volatility. If you would invest 8,275 in Walmart on August 29, 2024 and sell it today you would earn a total of 856.00 from holding Walmart or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BM European Value vs. Walmart
Performance |
| Timeline |
| BM European Value |
| Walmart |
BM European and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BM European and Walmart
The main advantage of trading using opposite BM European and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BM European 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.| BM European vs. BM European Value | BM European vs. Barratt Developments plc | BM European vs. J Sainsbury plc | BM European vs. Kingfisher plc |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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