Correlation Between Wal Mart and Arca Continental
Can any of the company-specific risk be diversified away by investing in both Wal Mart and Arca Continental 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 Wal Mart and Arca Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wal Mart de Mxico and Arca Continental SAB, you can compare the effects of market volatilities on Wal Mart and Arca Continental 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 Wal Mart with a short position of Arca Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and Arca Continental.
Diversification Opportunities for Wal Mart and Arca Continental
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wal and Arca is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and Arca Continental SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arca Continental SAB and Wal Mart 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 Wal Mart de Mxico are associated (or correlated) with Arca Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arca Continental SAB has no effect on the direction of Wal Mart i.e., Wal Mart and Arca Continental go up and down completely randomly.
Pair Corralation between Wal Mart and Arca Continental
Assuming the 90 days trading horizon Wal Mart de Mxico is expected to under-perform the Arca Continental. In addition to that, Wal Mart is 1.01 times more volatile than Arca Continental SAB. It trades about -0.07 of its total potential returns per unit of risk. Arca Continental SAB is currently generating about 0.03 per unit of volatility. If you would invest 16,258 in Arca Continental SAB on September 3, 2024 and sell it today you would earn a total of 946.00 from holding Arca Continental SAB or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wal Mart de Mxico vs. Arca Continental SAB
Performance |
| Timeline |
| Wal Mart de |
| Arca Continental SAB |
Wal Mart and Arca Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wal Mart and Arca Continental
The main advantage of trading using opposite Wal Mart and Arca Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wal Mart position performs unexpectedly, Arca Continental 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 Arca Continental will offset losses from the drop in Arca Continental's long position.| Wal Mart vs. Alsea SAB de | Wal Mart vs. Grupo Bimbo SAB | Wal Mart vs. Fomento Econmico Mexicano | Wal Mart vs. Grupo Financiero Banorte |
| Arca Continental vs. Gruma SAB de | Arca Continental vs. Alfa SAB de | Arca Continental vs. Fomento Econmico Mexicano | Arca Continental vs. Grupo Aeroportuario del |
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 Stocks Directory module to find actively traded stocks across global markets.
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