Correlation Between Walmart and Citic Telecom
Can any of the company-specific risk be diversified away by investing in both Walmart and Citic Telecom 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 Citic Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Citic Telecom International, you can compare the effects of market volatilities on Walmart and Citic Telecom 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 Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Citic Telecom.
Diversification Opportunities for Walmart and Citic Telecom
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Citic is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern 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 Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of Walmart i.e., Walmart and Citic Telecom go up and down completely randomly.
Pair Corralation between Walmart and Citic Telecom
Assuming the 90 days horizon Walmart is expected to generate 0.28 times more return on investment than Citic Telecom. However, Walmart is 3.57 times less risky than Citic Telecom. It trades about 0.23 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.05 per unit of risk. If you would invest 6,207 in Walmart on September 15, 2024 and sell it today you would earn a total of 2,792 from holding Walmart or generate 44.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Citic Telecom International
Performance |
| Timeline |
| Walmart |
| Citic Telecom Intern |
Walmart and Citic Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Citic Telecom
The main advantage of trading using opposite Walmart and Citic Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Citic Telecom 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 Citic Telecom will offset losses from the drop in Citic Telecom's long position.| Walmart vs. ATRYS HEALTH SA | Walmart vs. Dairy Farm International | Walmart vs. Natural Health Trends | Walmart vs. DiamondRock Hospitality |
| Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple Inc | Citic Telecom vs. Apple 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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