Correlation Between Walmart and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Walmart and Gol Linhas 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 Gol Linhas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Gol Linhas Areas, you can compare the effects of market volatilities on Walmart and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Gol Linhas.
Diversification Opportunities for Walmart and Gol Linhas
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Gol is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Gol Linhas Areas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Areas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Areas has no effect on the direction of Walmart i.e., Walmart and Gol Linhas go up and down completely randomly.
Pair Corralation between Walmart and Gol Linhas
Assuming the 90 days trading horizon Walmart is expected to generate 2.23 times more return on investment than Gol Linhas. However, Walmart is 2.23 times more volatile than Gol Linhas Areas. It trades about 0.05 of its potential returns per unit of risk. Gol Linhas Areas is currently generating about -0.04 per unit of risk. If you would invest 1,457 in Walmart on October 25, 2024 and sell it today you would earn a total of 2,037 from holding Walmart or generate 139.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Walmart vs. Gol Linhas Areas
Performance |
| Timeline |
| Walmart |
| Gol Linhas Areas |
Walmart and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Gol Linhas
The main advantage of trading using opposite Walmart and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| Walmart vs. G2D Investments | Walmart vs. Patria Investments Limited | Walmart vs. Palantir Technologies | Walmart vs. Agilent Technologies |
| Gol Linhas vs. Azul SA | Gol Linhas vs. Embraer SA | Gol Linhas vs. CVC Brasil Operadora | Gol Linhas vs. Usinas Siderrgicas de |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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