Correlation Between Walmart and American Express
Can any of the company-specific risk be diversified away by investing in both Walmart and American Express 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 American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and American Express Co, you can compare the effects of market volatilities on Walmart and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and American Express.
Diversification Opportunities for Walmart and American Express
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and American is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and American Express Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Walmart i.e., Walmart and American Express go up and down completely randomly.
Pair Corralation between Walmart and American Express
Assuming the 90 days trading horizon Walmart is expected to generate 0.82 times more return on investment than American Express. However, Walmart is 1.22 times less risky than American Express. It trades about 0.41 of its potential returns per unit of risk. American Express Co is currently generating about 0.2 per unit of risk. If you would invest 539,000 in Walmart on September 20, 2024 and sell it today you would earn a total of 72,000 from holding Walmart or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. American Express Co
Performance |
| Timeline |
| Walmart |
| American Express |
Walmart and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and American Express
The main advantage of trading using opposite Walmart and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Walmart vs. American Express Co | Walmart vs. QUALCOMM Incorporated | Walmart vs. United States Steel | Walmart vs. Pfizer Inc |
| American Express vs. QUALCOMM Incorporated | American Express vs. United States Steel | American Express vs. Pfizer Inc | American Express vs. Distribuidora de Gas |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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