Correlation Between Walmart and Ledesma SAAI
Can any of the company-specific risk be diversified away by investing in both Walmart and Ledesma SAAI 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 Ledesma SAAI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Ledesma SAAI, you can compare the effects of market volatilities on Walmart and Ledesma SAAI 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 Ledesma SAAI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Ledesma SAAI.
Diversification Opportunities for Walmart and Ledesma SAAI
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Ledesma is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ledesma SAAI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledesma SAAI 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 Ledesma SAAI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledesma SAAI has no effect on the direction of Walmart i.e., Walmart and Ledesma SAAI go up and down completely randomly.
Pair Corralation between Walmart and Ledesma SAAI
Assuming the 90 days trading horizon Walmart is expected to generate 0.4 times more return on investment than Ledesma SAAI. However, Walmart is 2.53 times less risky than Ledesma SAAI. It trades about 0.47 of its potential returns per unit of risk. Ledesma SAAI 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 | 100.0% |
| Values | Daily Returns |
Walmart vs. Ledesma SAAI
Performance |
| Timeline |
| Walmart |
| Ledesma SAAI |
Walmart and Ledesma SAAI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Ledesma SAAI
The main advantage of trading using opposite Walmart and Ledesma SAAI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Ledesma SAAI 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 Ledesma SAAI will offset losses from the drop in Ledesma SAAI's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| Ledesma SAAI vs. Harmony Gold Mining | Ledesma SAAI vs. Agrometal SAI | Ledesma SAAI vs. United States Steel | Ledesma SAAI vs. Compania de Transporte |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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