Correlation Between Walmart and Grupo Financiero
Can any of the company-specific risk be diversified away by investing in both Walmart and Grupo Financiero 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 Grupo Financiero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Grupo Financiero Galicia, you can compare the effects of market volatilities on Walmart and Grupo Financiero 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 Grupo Financiero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Grupo Financiero.
Diversification Opportunities for Walmart and Grupo Financiero
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Grupo is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Grupo Financiero Galicia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Galicia 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Galicia has no effect on the direction of Walmart i.e., Walmart and Grupo Financiero go up and down completely randomly.
Pair Corralation between Walmart and Grupo Financiero
Assuming the 90 days trading horizon Walmart is expected to generate 3.23 times less return on investment than Grupo Financiero. But when comparing it to its historical volatility, Walmart is 2.11 times less risky than Grupo Financiero. It trades about 0.11 of its potential returns per unit of risk. Grupo Financiero Galicia is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 526,000 in Grupo Financiero Galicia on November 2, 2024 and sell it today you would earn a total of 295,000 from holding Grupo Financiero Galicia or generate 56.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Grupo Financiero Galicia
Performance |
| Timeline |
| Walmart |
| Grupo Financiero Galicia |
Walmart and Grupo Financiero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Grupo Financiero
The main advantage of trading using opposite Walmart and Grupo Financiero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Grupo Financiero 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 Grupo Financiero will offset losses from the drop in Grupo Financiero's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| Grupo Financiero vs. Agrometal SAI | Grupo Financiero vs. Compania de Transporte | Grupo Financiero vs. United States Steel | Grupo Financiero 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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