Correlation Between Walmart and S1YM34
Can any of the company-specific risk be diversified away by investing in both Walmart and S1YM34 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 S1YM34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and S1YM34, you can compare the effects of market volatilities on Walmart and S1YM34 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 S1YM34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and S1YM34.
Diversification Opportunities for Walmart and S1YM34
Very poor diversification
The 3 months correlation between Walmart and S1YM34 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and S1YM34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S1YM34 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 S1YM34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S1YM34 has no effect on the direction of Walmart i.e., Walmart and S1YM34 go up and down completely randomly.
Pair Corralation between Walmart and S1YM34
Assuming the 90 days trading horizon Walmart is expected to generate 4.98 times more return on investment than S1YM34. However, Walmart is 4.98 times more volatile than S1YM34. It trades about 0.05 of its potential returns per unit of risk. S1YM34 is currently generating about 0.05 per unit of risk. If you would invest 1,539 in Walmart on September 26, 2024 and sell it today you would earn a total of 1,967 from holding Walmart or generate 127.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.8% |
| Values | Daily Returns |
Walmart vs. S1YM34
Performance |
| Timeline |
| Walmart |
| S1YM34 |
Walmart and S1YM34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and S1YM34
The main advantage of trading using opposite Walmart and S1YM34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, S1YM34 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 S1YM34 will offset losses from the drop in S1YM34's long position.| Walmart vs. Electronic Arts | Walmart vs. Bemobi Mobile Tech | Walmart vs. Brpr Corporate Offices | Walmart vs. Unity Software |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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