Correlation Between Walmart and Compania
Can any of the company-specific risk be diversified away by investing in both Walmart and Compania 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 Compania into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Compania de Transporte, you can compare the effects of market volatilities on Walmart and Compania 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 Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Compania.
Diversification Opportunities for Walmart and Compania
Weak diversification
The 3 months correlation between Walmart and Compania is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Compania de Transporte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Transporte 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 Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Transporte has no effect on the direction of Walmart i.e., Walmart and Compania go up and down completely randomly.
Pair Corralation between Walmart and Compania
Assuming the 90 days trading horizon Walmart is expected to generate 0.31 times more return on investment than Compania. However, Walmart is 3.26 times less risky than Compania. It trades about 0.47 of its potential returns per unit of risk. Compania de Transporte is currently generating about 0.01 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Compania de Transporte
Performance |
| Timeline |
| Walmart |
| Compania de Transporte |
Walmart and Compania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Compania
The main advantage of trading using opposite Walmart and Compania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Compania 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 Compania will offset losses from the drop in Compania's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart 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 Stocks Directory module to find actively traded stocks across global markets.
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