Correlation Between Target and Wal Mart
Can any of the company-specific risk be diversified away by investing in both Target and Wal Mart 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 Target and Wal Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target and Wal Mart de, you can compare the effects of market volatilities on Target and Wal Mart 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 Target with a short position of Wal Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target and Wal Mart.
Diversification Opportunities for Target and Wal Mart
Good diversification
The 3 months correlation between Target and Wal is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Target and Wal Mart de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and Target 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 Target are associated (or correlated) with Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Target i.e., Target and Wal Mart go up and down completely randomly.
Pair Corralation between Target and Wal Mart
Considering the 90-day investment horizon Target is expected to generate 0.66 times more return on investment than Wal Mart. However, Target is 1.52 times less risky than Wal Mart. It trades about 0.06 of its potential returns per unit of risk. Wal Mart de is currently generating about -0.01 per unit of risk. If you would invest 13,579 in Target on November 4, 2024 and sell it today you would earn a total of 212.00 from holding Target or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target vs. Wal Mart de
Performance |
| Timeline |
| Target |
| Wal Mart de |
Target and Wal Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target and Wal Mart
The main advantage of trading using opposite Target and Wal Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target position performs unexpectedly, Wal Mart 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 Wal Mart will offset losses from the drop in Wal Mart's long position.| Target vs. Costco Wholesale Corp | Target vs. Dollar Tree | Target vs. BJs Wholesale Club | Target vs. Dollar General |
| Wal Mart vs. Wal Mart de | Wal Mart vs. Fomento Economico Mexicano | Wal Mart vs. Tesco PLC | Wal Mart vs. United Overseas Bank |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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