Correlation Between Walmart and National Grid
Can any of the company-specific risk be diversified away by investing in both Walmart and National Grid 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 National Grid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and National Grid PLC, you can compare the effects of market volatilities on Walmart and National Grid 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 National Grid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and National Grid.
Diversification Opportunities for Walmart and National Grid
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and National is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and National Grid PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Grid 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 National Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Grid PLC has no effect on the direction of Walmart i.e., Walmart and National Grid go up and down completely randomly.
Pair Corralation between Walmart and National Grid
Assuming the 90 days horizon Walmart is expected to generate 0.56 times more return on investment than National Grid. However, Walmart is 1.8 times less risky than National Grid. It trades about 0.12 of its potential returns per unit of risk. National Grid PLC is currently generating about 0.02 per unit of risk. If you would invest 4,583 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,169 from holding Walmart or generate 90.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. National Grid PLC
Performance |
| Timeline |
| Walmart |
| National Grid PLC |
Walmart and National Grid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and National Grid
The main advantage of trading using opposite Walmart and National Grid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, National Grid 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 National Grid will offset losses from the drop in National Grid's long position.| Walmart vs. Walmart | Walmart vs. Superior Plus Corp | Walmart vs. NMI Holdings | Walmart vs. Origin Agritech |
| National Grid vs. Iberdrola SA | National Grid vs. Enel SpA | National Grid vs. Dominion Energy | National Grid vs. Sempra |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |