Correlation Between Walt Disney and Walmart
Can any of the company-specific risk be diversified away by investing in both Walt Disney 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 Walt Disney and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and Walmart, you can compare the effects of market volatilities on Walt Disney 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 Walt Disney with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walt Disney and Walmart.
Diversification Opportunities for Walt Disney and Walmart
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walt and Walmart is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Walt Disney 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 Walt Disney 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 Walt Disney i.e., Walt Disney and Walmart go up and down completely randomly.
Pair Corralation between Walt Disney and Walmart
Assuming the 90 days trading horizon Walt Disney is expected to generate 1.1 times more return on investment than Walmart. However, Walt Disney is 1.1 times more volatile than Walmart. It trades about 0.1 of its potential returns per unit of risk. Walmart is currently generating about 0.11 per unit of risk. If you would invest 969,000 in Walt Disney on November 2, 2024 and sell it today you would earn a total of 153,500 from holding Walt Disney or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. Walmart
Performance |
| Timeline |
| Walt Disney |
| Walmart |
Walt Disney and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walt Disney and Walmart
The main advantage of trading using opposite Walt Disney and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walt Disney 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.| Walt Disney vs. United States Steel | Walt Disney vs. Agrometal SAI | Walt Disney vs. Transportadora de Gas | Walt Disney vs. Harmony Gold Mining |
| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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