Correlation Between Grocery Outlet and Walmart
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet 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 Grocery Outlet and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and Walmart, you can compare the effects of market volatilities on Grocery Outlet 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 Grocery Outlet with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and Walmart.
Diversification Opportunities for Grocery Outlet and Walmart
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grocery and Walmart is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Walmart go up and down completely randomly.
Pair Corralation between Grocery Outlet and Walmart
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Walmart. In addition to that, Grocery Outlet is 2.34 times more volatile than Walmart. It trades about -0.02 of its total potential returns per unit of risk. Walmart is currently generating about 0.15 per unit of volatility. If you would invest 5,050 in Walmart on September 2, 2024 and sell it today you would earn a total of 4,200 from holding Walmart or generate 83.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grocery Outlet Holding vs. Walmart
Performance |
| Timeline |
| Grocery Outlet Holding |
| Walmart |
Grocery Outlet and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and Walmart
The main advantage of trading using opposite Grocery Outlet and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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.| Grocery Outlet vs. Ingles Markets Incorporated | Grocery Outlet vs. Ocado Group plc | Grocery Outlet vs. Sprouts Farmers Market |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |