Correlation Between Walmart and Cresud SA
Can any of the company-specific risk be diversified away by investing in both Walmart and Cresud SA 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 Cresud SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Cresud SA, you can compare the effects of market volatilities on Walmart and Cresud SA 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 Cresud SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cresud SA.
Diversification Opportunities for Walmart and Cresud SA
Very poor diversification
The 3 months correlation between Walmart and Cresud is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cresud SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresud 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 Cresud SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresud SA has no effect on the direction of Walmart i.e., Walmart and Cresud SA go up and down completely randomly.
Pair Corralation between Walmart and Cresud SA
Assuming the 90 days trading horizon Walmart is expected to generate 0.34 times more return on investment than Cresud SA. However, Walmart is 2.95 times less risky than Cresud SA. It trades about 0.47 of its potential returns per unit of risk. Cresud SA is currently generating about -0.02 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 | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Cresud SA
Performance |
| Timeline |
| Walmart |
| Cresud SA |
Walmart and Cresud SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Cresud SA
The main advantage of trading using opposite Walmart and Cresud SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Cresud SA 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 Cresud SA will offset losses from the drop in Cresud SA's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| Cresud SA vs. Harmony Gold Mining | Cresud SA vs. United States Steel | Cresud SA vs. Transportadora de Gas | Cresud SA vs. Telecom Argentina |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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