Correlation Between Walmart and Banco Macro
Can any of the company-specific risk be diversified away by investing in both Walmart and Banco Macro 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 Banco Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Banco Macro SA, you can compare the effects of market volatilities on Walmart and Banco Macro 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 Banco Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Banco Macro.
Diversification Opportunities for Walmart and Banco Macro
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Banco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Banco Macro SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Macro SA 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 Banco Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Macro SA has no effect on the direction of Walmart i.e., Walmart and Banco Macro go up and down completely randomly.
Pair Corralation between Walmart and Banco Macro
Assuming the 90 days trading horizon Walmart is expected to generate 6.92 times less return on investment than Banco Macro. But when comparing it to its historical volatility, Walmart is 3.65 times less risky than Banco Macro. It trades about 0.07 of its potential returns per unit of risk. Banco Macro SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,110,000 in Banco Macro SA on October 20, 2024 and sell it today you would earn a total of 122,500 from holding Banco Macro SA or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Banco Macro SA
Performance |
| Timeline |
| Walmart |
| Banco Macro SA |
Walmart and Banco Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Banco Macro
The main advantage of trading using opposite Walmart and Banco Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Banco Macro 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 Banco Macro will offset losses from the drop in Banco Macro's long position.| Walmart vs. United States Steel | Walmart vs. Telecom Argentina | Walmart vs. Transportadora de Gas | Walmart vs. Agrometal SAI |
| Banco Macro vs. Banco Santander Ro | Banco Macro vs. Banco Patagonia | Banco Macro vs. Grupo Supervielle SA | Banco Macro vs. Banco Hipotecario 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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