Correlation Between Walmart and Sunrun
Can any of the company-specific risk be diversified away by investing in both Walmart and Sunrun 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 Sunrun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Sunrun Inc, you can compare the effects of market volatilities on Walmart and Sunrun 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 Sunrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Sunrun.
Diversification Opportunities for Walmart and Sunrun
Pay attention - limited upside
The 3 months correlation between Walmart and Sunrun is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Sunrun Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunrun Inc 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 Sunrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunrun Inc has no effect on the direction of Walmart i.e., Walmart and Sunrun go up and down completely randomly.
Pair Corralation between Walmart and Sunrun
Assuming the 90 days horizon Walmart is expected to generate 0.17 times more return on investment than Sunrun. However, Walmart is 5.84 times less risky than Sunrun. It trades about 0.51 of its potential returns per unit of risk. Sunrun Inc is currently generating about -0.04 per unit of risk. If you would invest 7,500 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,200 from holding Walmart or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. Sunrun Inc
Performance |
| Timeline |
| Walmart |
| Sunrun Inc |
Walmart and Sunrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Sunrun
The main advantage of trading using opposite Walmart and Sunrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Sunrun 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 Sunrun will offset losses from the drop in Sunrun's long position.| Walmart vs. Hyatt Hotels | Walmart vs. Ross Stores | Walmart vs. Sunstone Hotel Investors | Walmart vs. Retail Estates NV |
| Sunrun vs. Xinyi Solar Holdings | Sunrun vs. JinkoSolar Holding Co | Sunrun vs. SMA Solar Technology | Sunrun vs. Superior Plus Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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