Correlation Between Walmart and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Walmart and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Dow Jones Industrial, you can compare the effects of market volatilities on Walmart and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Dow Jones.
Diversification Opportunities for Walmart and Dow Jones
Poor diversification
The 3 months correlation between Walmart and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Walmart i.e., Walmart and Dow Jones go up and down completely randomly.
Pair Corralation between Walmart and Dow Jones
Assuming the 90 days trading horizon Walmart is expected to generate 1.87 times more return on investment than Dow Jones. However, Walmart is 1.87 times more volatile than Dow Jones Industrial. It trades about 0.04 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.28 per unit of risk. If you would invest 8,488 in Walmart on September 24, 2024 and sell it today you would earn a total of 93.00 from holding Walmart or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Dow Jones Industrial
Performance |
| Timeline |
Walmart and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Walmart
Pair trading matchups for Walmart
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Walmart and Dow Jones
The main advantage of trading using opposite Walmart and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Walmart vs. PLAYMATES TOYS | Walmart vs. Summit Materials | Walmart vs. Media and Games | Walmart vs. Applied Materials |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. Lion One Metals | Dow Jones vs. Blue Moon Metals | Dow Jones vs. Xunlei Ltd Adr |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |