Correlation Between Walmart and Holcim Argentina
Can any of the company-specific risk be diversified away by investing in both Walmart and Holcim Argentina 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 Holcim Argentina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Holcim Argentina SA, you can compare the effects of market volatilities on Walmart and Holcim Argentina 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 Holcim Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Holcim Argentina.
Diversification Opportunities for Walmart and Holcim Argentina
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Holcim is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Holcim Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim Argentina 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 Holcim Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim Argentina has no effect on the direction of Walmart i.e., Walmart and Holcim Argentina go up and down completely randomly.
Pair Corralation between Walmart and Holcim Argentina
Assuming the 90 days trading horizon Walmart is expected to generate 0.5 times more return on investment than Holcim Argentina. However, Walmart is 2.01 times less risky than Holcim Argentina. It trades about 0.07 of its potential returns per unit of risk. Holcim Argentina SA is currently generating about 0.01 per unit of risk. If you would invest 599,000 in Walmart on October 20, 2024 and sell it today you would earn a total of 10,000 from holding Walmart or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Holcim Argentina SA
Performance |
| Timeline |
| Walmart |
| Holcim Argentina |
Walmart and Holcim Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Holcim Argentina
The main advantage of trading using opposite Walmart and Holcim Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Holcim Argentina 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 Holcim Argentina will offset losses from the drop in Holcim Argentina's long position.| Walmart vs. United States Steel | Walmart vs. Telecom Argentina | Walmart vs. Transportadora de Gas | Walmart vs. Agrometal SAI |
| Holcim Argentina vs. Agrometal SAI | Holcim Argentina vs. Compania de Transporte | Holcim Argentina vs. Telecom Argentina | Holcim Argentina vs. Transportadora 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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