Correlation Between AECOM TECHNOLOGY and Walmart
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Walmart, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Walmart.
Diversification Opportunities for AECOM TECHNOLOGY and Walmart
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AECOM and Walmart is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Walmart go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Walmart
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to under-perform the Walmart. In addition to that, AECOM TECHNOLOGY is 1.35 times more volatile than Walmart. It trades about -0.02 of its total potential returns per unit of risk. Walmart is currently generating about 0.16 per unit of volatility. If you would invest 8,751 in Walmart on October 28, 2024 and sell it today you would earn a total of 264.00 from holding Walmart or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Walmart
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Walmart |
AECOM TECHNOLOGY and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Walmart
The main advantage of trading using opposite AECOM TECHNOLOGY and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc |
| Walmart vs. PLAYMATES TOYS | Walmart vs. DETALION GAMES SA | Walmart vs. Scottish Mortgage Investment | Walmart vs. FRACTAL GAMING GROUP |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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