Correlation Between Grupo Financiero and Walmart
Can any of the company-specific risk be diversified away by investing in both Grupo Financiero 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 Grupo Financiero and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Financiero Galicia and Walmart, you can compare the effects of market volatilities on Grupo Financiero 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 Grupo Financiero with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Financiero and Walmart.
Diversification Opportunities for Grupo Financiero and Walmart
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Grupo and Walmart is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Galicia and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grupo Financiero 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 Grupo Financiero Galicia 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 Grupo Financiero i.e., Grupo Financiero and Walmart go up and down completely randomly.
Pair Corralation between Grupo Financiero and Walmart
Assuming the 90 days trading horizon Grupo Financiero Galicia is expected to generate 2.53 times more return on investment than Walmart. However, Grupo Financiero is 2.53 times more volatile than Walmart. It trades about 0.14 of its potential returns per unit of risk. Walmart is currently generating about 0.07 per unit of risk. If you would invest 724,000 in Grupo Financiero Galicia on October 20, 2024 and sell it today you would earn a total of 60,000 from holding Grupo Financiero Galicia or generate 8.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Financiero Galicia vs. Walmart
Performance |
| Timeline |
| Grupo Financiero Galicia |
| Walmart |
Grupo Financiero and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Financiero and Walmart
The main advantage of trading using opposite Grupo Financiero and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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.| Grupo Financiero vs. Banco Bradesco DRC | Grupo Financiero vs. Banco Santander Brasil | Grupo Financiero vs. Banco Santander Ro | Grupo Financiero vs. Central Puerto SA |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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