Correlation Between Walmart and ITM Power
Can any of the company-specific risk be diversified away by investing in both Walmart and ITM Power 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 ITM Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and ITM Power Plc, you can compare the effects of market volatilities on Walmart and ITM Power 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 ITM Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ITM Power.
Diversification Opportunities for Walmart and ITM Power
Pay attention - limited upside
The 3 months correlation between Walmart and ITM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ITM Power Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Power Plc 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 ITM Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Power Plc has no effect on the direction of Walmart i.e., Walmart and ITM Power go up and down completely randomly.
Pair Corralation between Walmart and ITM Power
Assuming the 90 days horizon Walmart is expected to generate 0.62 times more return on investment than ITM Power. However, Walmart is 1.6 times less risky than ITM Power. It trades about -0.06 of its potential returns per unit of risk. ITM Power Plc is currently generating about -0.15 per unit of risk. If you would invest 9,223 in Walmart on November 27, 2024 and sell it today you would lose (261.00) from holding Walmart or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. ITM Power Plc
Performance |
| Timeline |
| Walmart |
| ITM Power Plc |
Walmart and ITM Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and ITM Power
The main advantage of trading using opposite Walmart and ITM Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ITM Power 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 ITM Power will offset losses from the drop in ITM Power's long position.| Walmart vs. Corsair Gaming | Walmart vs. Xenia Hotels Resorts | Walmart vs. Summit Hotel Properties | Walmart vs. Urban Outfitters |
| ITM Power vs. Nel ASA | ITM Power vs. Powercell Sweden | ITM Power vs. Ballard Power Systems | ITM Power vs. Plug Power |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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