Correlation Between Walmart and United States
Can any of the company-specific risk be diversified away by investing in both Walmart and United States 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 United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and United States Steel, you can compare the effects of market volatilities on Walmart and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and United States.
Diversification Opportunities for Walmart and United States
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and United is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Walmart i.e., Walmart and United States go up and down completely randomly.
Pair Corralation between Walmart and United States
Assuming the 90 days trading horizon Walmart is expected to generate 2.8 times less return on investment than United States. In addition to that, Walmart is 1.23 times more volatile than United States Steel. It trades about 0.03 of its total potential returns per unit of risk. United States Steel is currently generating about 0.09 per unit of volatility. If you would invest 350,000 in United States Steel on October 16, 2024 and sell it today you would earn a total of 1,100,000 from holding United States Steel or generate 314.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. United States Steel
Performance |
| Timeline |
| Walmart |
| United States Steel |
Walmart and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and United States
The main advantage of trading using opposite Walmart and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Walmart vs. United States Steel | Walmart vs. Harmony Gold Mining | Walmart vs. Compania de Transporte | Walmart vs. Telecom Argentina |
| United States vs. Harmony Gold Mining | United States vs. Transportadora de Gas | United States vs. Agrometal SAI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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