Correlation Between Monteiro Aranha and Walmart
Can any of the company-specific risk be diversified away by investing in both Monteiro Aranha 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 Monteiro Aranha and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monteiro Aranha SA and Walmart, you can compare the effects of market volatilities on Monteiro Aranha 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 Monteiro Aranha with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monteiro Aranha and Walmart.
Diversification Opportunities for Monteiro Aranha and Walmart
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monteiro and Walmart is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Monteiro Aranha SA and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Monteiro Aranha 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 Monteiro Aranha SA 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 Monteiro Aranha i.e., Monteiro Aranha and Walmart go up and down completely randomly.
Pair Corralation between Monteiro Aranha and Walmart
Assuming the 90 days trading horizon Monteiro Aranha is expected to generate 3.89 times less return on investment than Walmart. But when comparing it to its historical volatility, Monteiro Aranha SA is 2.45 times less risky than Walmart. It trades about 0.23 of its potential returns per unit of risk. Walmart is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 2,949 in Walmart on August 25, 2024 and sell it today you would earn a total of 341.00 from holding Walmart or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monteiro Aranha SA vs. Walmart
Performance |
| Timeline |
| Monteiro Aranha SA |
| Walmart |
Monteiro Aranha and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monteiro Aranha and Walmart
The main advantage of trading using opposite Monteiro Aranha and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monteiro Aranha 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.| Monteiro Aranha vs. METISA Metalrgica Timboense | Monteiro Aranha vs. Mangels Industrial SA | Monteiro Aranha vs. Randon SA Implementos | Monteiro Aranha vs. Pettenati SA Industria |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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