Correlation Between United Overseas and Wal Mart
Can any of the company-specific risk be diversified away by investing in both United Overseas 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 United Overseas and Wal Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Overseas Bank and Wal Mart de, you can compare the effects of market volatilities on United Overseas 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 United Overseas with a short position of Wal Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Overseas and Wal Mart.
Diversification Opportunities for United Overseas and Wal Mart
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Wal is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding United Overseas Bank 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 United Overseas 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 United Overseas Bank 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 United Overseas i.e., United Overseas and Wal Mart go up and down completely randomly.
Pair Corralation between United Overseas and Wal Mart
Assuming the 90 days horizon United Overseas Bank is expected to generate 1.07 times more return on investment than Wal Mart. However, United Overseas is 1.07 times more volatile than Wal Mart de. It trades about 0.3 of its potential returns per unit of risk. Wal Mart de is currently generating about -0.02 per unit of risk. If you would invest 4,862 in United Overseas Bank on September 1, 2024 and sell it today you would earn a total of 576.00 from holding United Overseas Bank or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
United Overseas Bank vs. Wal Mart de
Performance |
| Timeline |
| United Overseas Bank |
| Wal Mart de |
United Overseas and Wal Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Overseas and Wal Mart
The main advantage of trading using opposite United Overseas and Wal Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Overseas 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.| United Overseas vs. KBC Groep NV | United Overseas vs. DBS Group Holdings | United Overseas vs. HomeStreet | United Overseas vs. Bank of Hawaii |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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