Correlation Between Walmart and Novavax
Can any of the company-specific risk be diversified away by investing in both Walmart and Novavax 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 Novavax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Novavax, you can compare the effects of market volatilities on Walmart and Novavax 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 Novavax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Novavax.
Diversification Opportunities for Walmart and Novavax
Pay attention - limited upside
The 3 months correlation between Walmart and Novavax is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Novavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavax 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 Novavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavax has no effect on the direction of Walmart i.e., Walmart and Novavax go up and down completely randomly.
Pair Corralation between Walmart and Novavax
Assuming the 90 days horizon Walmart is expected to generate 2.58 times less return on investment than Novavax. But when comparing it to its historical volatility, Walmart is 8.12 times less risky than Novavax. It trades about 0.19 of its potential returns per unit of risk. Novavax is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 551.00 in Novavax on August 25, 2024 and sell it today you would earn a total of 269.00 from holding Novavax or generate 48.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Novavax
Performance |
| Timeline |
| Walmart |
| Novavax |
Walmart and Novavax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Novavax
The main advantage of trading using opposite Walmart and Novavax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Novavax 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 Novavax will offset losses from the drop in Novavax's long position.| Walmart vs. Superior Plus Corp | Walmart vs. NMI Holdings | Walmart vs. Origin Agritech | Walmart vs. SIVERS SEMICONDUCTORS AB |
| Novavax vs. CSL Limited | Novavax vs. Superior Plus Corp | Novavax vs. NMI Holdings | Novavax vs. Origin Agritech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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