Correlation Between Walmart and Superior Plus
Can any of the company-specific risk be diversified away by investing in both Walmart and Superior Plus 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 Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Superior Plus Corp, you can compare the effects of market volatilities on Walmart and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Superior Plus.
Diversification Opportunities for Walmart and Superior Plus
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Superior is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of Walmart i.e., Walmart and Superior Plus go up and down completely randomly.
Pair Corralation between Walmart and Superior Plus
Assuming the 90 days horizon Walmart is expected to generate 0.45 times more return on investment than Superior Plus. However, Walmart is 2.21 times less risky than Superior Plus. It trades about 0.24 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.08 per unit of risk. If you would invest 5,928 in Walmart on August 29, 2024 and sell it today you would earn a total of 2,772 from holding Walmart or generate 46.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Superior Plus Corp
Performance |
| Timeline |
| Walmart |
| Superior Plus Corp |
Walmart and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Superior Plus
The main advantage of trading using opposite Walmart and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| Walmart vs. Tradeweb Markets | Walmart vs. Check Point Software | Walmart vs. Vastned Retail NV | Walmart vs. CPU SOFTWAREHOUSE |
| Superior Plus vs. Meli Hotels International | Superior Plus vs. InterContinental Hotels Group | Superior Plus vs. PT Bank Maybank | Superior Plus vs. Pebblebrook Hotel Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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