Correlation Between Walmart and Loma Negra
Can any of the company-specific risk be diversified away by investing in both Walmart and Loma Negra 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 Loma Negra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Loma Negra Compania, you can compare the effects of market volatilities on Walmart and Loma Negra 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 Loma Negra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Loma Negra.
Diversification Opportunities for Walmart and Loma Negra
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Loma is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Loma Negra Compania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loma Negra Compania 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 Loma Negra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loma Negra Compania has no effect on the direction of Walmart i.e., Walmart and Loma Negra go up and down completely randomly.
Pair Corralation between Walmart and Loma Negra
Assuming the 90 days trading horizon Walmart is expected to generate 0.25 times more return on investment than Loma Negra. However, Walmart is 3.97 times less risky than Loma Negra. It trades about 0.47 of its potential returns per unit of risk. Loma Negra Compania is currently generating about 0.0 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Loma Negra Compania
Performance |
| Timeline |
| Walmart |
| Loma Negra Compania |
Walmart and Loma Negra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Loma Negra
The main advantage of trading using opposite Walmart and Loma Negra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Loma Negra 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 Loma Negra will offset losses from the drop in Loma Negra's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| Loma Negra vs. Agrometal SAI | Loma Negra vs. Transportadora de Gas | Loma Negra vs. Harmony Gold Mining | Loma Negra vs. United States Steel |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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