Correlation Between Wal Mart and Alsea SAB
Can any of the company-specific risk be diversified away by investing in both Wal Mart and Alsea SAB 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 Alsea SAB 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 Alsea SAB de, you can compare the effects of market volatilities on Wal Mart and Alsea SAB 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 Alsea SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and Alsea SAB.
Diversification Opportunities for Wal Mart and Alsea SAB
Very poor diversification
The 3 months correlation between Wal and Alsea is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and Alsea SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alsea SAB de 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 Alsea SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alsea SAB de has no effect on the direction of Wal Mart i.e., Wal Mart and Alsea SAB go up and down completely randomly.
Pair Corralation between Wal Mart and Alsea SAB
Assuming the 90 days trading horizon Wal Mart de Mxico is expected to under-perform the Alsea SAB. In addition to that, Wal Mart is 1.07 times more volatile than Alsea SAB de. It trades about -0.27 of its total potential returns per unit of risk. Alsea SAB de is currently generating about -0.28 per unit of volatility. If you would invest 5,136 in Alsea SAB de on August 25, 2024 and sell it today you would lose (432.00) from holding Alsea SAB de or give up 8.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wal Mart de Mxico vs. Alsea SAB de
Performance |
| Timeline |
| Wal Mart de |
| Alsea SAB de |
Wal Mart and Alsea SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wal Mart and Alsea SAB
The main advantage of trading using opposite Wal Mart and Alsea SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wal Mart position performs unexpectedly, Alsea SAB 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 Alsea SAB will offset losses from the drop in Alsea SAB'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 |
| Alsea SAB vs. CEMEX SAB de | Alsea SAB vs. Grupo Financiero Banorte | Alsea SAB vs. Grupo Bimbo SAB | Alsea SAB vs. Fomento Econmico Mexicano |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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