Correlation Between Walmart and MercadoLibre,
Can any of the company-specific risk be diversified away by investing in both Walmart and MercadoLibre, 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 MercadoLibre, into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and MercadoLibre,, you can compare the effects of market volatilities on Walmart and MercadoLibre, 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 MercadoLibre,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and MercadoLibre,.
Diversification Opportunities for Walmart and MercadoLibre,
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and MercadoLibre, is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and MercadoLibre, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MercadoLibre, 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 MercadoLibre,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MercadoLibre, has no effect on the direction of Walmart i.e., Walmart and MercadoLibre, go up and down completely randomly.
Pair Corralation between Walmart and MercadoLibre,
Assuming the 90 days trading horizon Walmart is expected to generate 0.75 times more return on investment than MercadoLibre,. However, Walmart is 1.33 times less risky than MercadoLibre,. It trades about 0.38 of its potential returns per unit of risk. MercadoLibre, is currently generating about -0.16 per unit of risk. If you would invest 539,000 in Walmart on September 19, 2024 and sell it today you would earn a total of 65,000 from holding Walmart or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. MercadoLibre,
Performance |
| Timeline |
| Walmart |
| MercadoLibre, |
Walmart and MercadoLibre, Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and MercadoLibre,
The main advantage of trading using opposite Walmart and MercadoLibre, positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, MercadoLibre, 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 MercadoLibre, will offset losses from the drop in MercadoLibre,'s long position.| Walmart vs. Compania de Transporte | Walmart vs. Harmony Gold Mining | Walmart vs. Agrometal SAI | Walmart vs. United States Steel |
| MercadoLibre, vs. Alibaba Group Holding | MercadoLibre, vs. Apple Inc DRC | MercadoLibre, vs. Alphabet Inc Class A CEDEAR | MercadoLibre, vs. Amazon Inc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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