Correlation Between Walmart and BBVA Banco
Can any of the company-specific risk be diversified away by investing in both Walmart and BBVA Banco 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 BBVA Banco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and BBVA Banco Frances, you can compare the effects of market volatilities on Walmart and BBVA Banco 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 BBVA Banco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BBVA Banco.
Diversification Opportunities for Walmart and BBVA Banco
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and BBVA is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BBVA Banco Frances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBVA Banco Frances 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 BBVA Banco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBVA Banco Frances has no effect on the direction of Walmart i.e., Walmart and BBVA Banco go up and down completely randomly.
Pair Corralation between Walmart and BBVA Banco
Assuming the 90 days trading horizon Walmart is expected to generate 0.2 times more return on investment than BBVA Banco. However, Walmart is 5.03 times less risky than BBVA Banco. It trades about 0.47 of its potential returns per unit of risk. BBVA Banco Frances is currently generating about 0.07 per unit of risk. If you would invest 588,000 in Walmart on November 2, 2024 and sell it today you would earn a total of 57,000 from holding Walmart or generate 9.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. BBVA Banco Frances
Performance |
| Timeline |
| Walmart |
| BBVA Banco Frances |
Walmart and BBVA Banco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and BBVA Banco
The main advantage of trading using opposite Walmart and BBVA Banco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BBVA Banco 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 BBVA Banco will offset losses from the drop in BBVA Banco's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| BBVA Banco vs. Agrometal SAI | BBVA Banco vs. Transportadora de Gas | BBVA Banco vs. International Business Machines | BBVA Banco vs. Grimoldi SA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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