Correlation Between Distribuidora and Walmart
Can any of the company-specific risk be diversified away by investing in both Distribuidora 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 Distribuidora and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Distribuidora de Gas and Walmart, you can compare the effects of market volatilities on Distribuidora 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 Distribuidora with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Distribuidora and Walmart.
Diversification Opportunities for Distribuidora and Walmart
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Distribuidora and Walmart is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Distribuidora 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 Distribuidora de Gas 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 Distribuidora i.e., Distribuidora and Walmart go up and down completely randomly.
Pair Corralation between Distribuidora and Walmart
Assuming the 90 days trading horizon Distribuidora de Gas is expected to under-perform the Walmart. In addition to that, Distribuidora is 2.56 times more volatile than Walmart. It trades about -0.11 of its total potential returns per unit of risk. Walmart is currently generating about 0.07 per unit of volatility. If you would invest 599,000 in Walmart on October 20, 2024 and sell it today you would earn a total of 10,000 from holding Walmart or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Distribuidora de Gas vs. Walmart
Performance |
| Timeline |
| Distribuidora de Gas |
| Walmart |
Distribuidora and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Distribuidora and Walmart
The main advantage of trading using opposite Distribuidora and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora 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.| Distribuidora vs. Naturgy BAN SA | Distribuidora vs. Transportadora de Gas | Distribuidora vs. Walmart | Distribuidora vs. Central Puerto SA |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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