Correlation Between Wal Mart and Target
Can any of the company-specific risk be diversified away by investing in both Wal Mart and Target 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 Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wal Mart de and Target, you can compare the effects of market volatilities on Wal Mart and Target 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 Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and Target.
Diversification Opportunities for Wal Mart and Target
Good diversification
The 3 months correlation between Wal and Target is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Wal Mart i.e., Wal Mart and Target go up and down completely randomly.
Pair Corralation between Wal Mart and Target
Assuming the 90 days horizon Wal Mart de is expected to under-perform the Target. In addition to that, Wal Mart is 1.52 times more volatile than Target. It trades about -0.01 of its total potential returns per unit of risk. Target is currently generating about 0.06 per unit of volatility. If you would invest 13,579 in Target on November 4, 2024 and sell it today you would earn a total of 212.00 from holding Target or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wal Mart de vs. Target
Performance |
| Timeline |
| Wal Mart de |
| Target |
Wal Mart and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wal Mart and Target
The main advantage of trading using opposite Wal Mart and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wal Mart position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Wal Mart vs. Wal Mart de | Wal Mart vs. Fomento Economico Mexicano | Wal Mart vs. Tesco PLC | Wal Mart vs. United Overseas Bank |
| Target vs. Costco Wholesale Corp | Target vs. Dollar Tree | Target vs. BJs Wholesale Club | Target vs. Dollar General |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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