Correlation Between Walmart and BrasilAgro Companhia
Can any of the company-specific risk be diversified away by investing in both Walmart and BrasilAgro Companhia 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 Walmart and BrasilAgro Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and BrasilAgro Companhia, you can compare the effects of market volatilities on Walmart and BrasilAgro Companhia 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 Walmart with a short position of BrasilAgro Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BrasilAgro Companhia.
Diversification Opportunities for Walmart and BrasilAgro Companhia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and BrasilAgro is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BrasilAgro Companhia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrasilAgro Companhia and Walmart 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 Walmart are associated (or correlated) with BrasilAgro Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrasilAgro Companhia has no effect on the direction of Walmart i.e., Walmart and BrasilAgro Companhia go up and down completely randomly.
Pair Corralation between Walmart and BrasilAgro Companhia
Assuming the 90 days trading horizon Walmart is expected to generate 0.6 times more return on investment than BrasilAgro Companhia. However, Walmart is 1.66 times less risky than BrasilAgro Companhia. It trades about 0.17 of its potential returns per unit of risk. BrasilAgro Companhia is currently generating about 0.03 per unit of risk. If you would invest 1,520 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,959 from holding Walmart or generate 128.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. BrasilAgro Companhia
Performance |
| Timeline |
| Walmart |
| BrasilAgro Companhia |
Walmart and BrasilAgro Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and BrasilAgro Companhia
The main advantage of trading using opposite Walmart and BrasilAgro Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BrasilAgro Companhia 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 BrasilAgro Companhia will offset losses from the drop in BrasilAgro Companhia's long position.| Walmart vs. Hospital Mater Dei | Walmart vs. Zoom Video Communications | Walmart vs. Metalrgica Riosulense SA | Walmart vs. Metalurgica Gerdau 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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