Correlation Between Walmart and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Walmart and Micron Technology 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 Micron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Micron Technology, you can compare the effects of market volatilities on Walmart and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Micron Technology.
Diversification Opportunities for Walmart and Micron Technology
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Micron is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Walmart i.e., Walmart and Micron Technology go up and down completely randomly.
Pair Corralation between Walmart and Micron Technology
Assuming the 90 days trading horizon Walmart is expected to generate 0.45 times more return on investment than Micron Technology. However, Walmart is 2.22 times less risky than Micron Technology. It trades about 0.34 of its potential returns per unit of risk. Micron Technology is currently generating about 0.01 per unit of risk. If you would invest 165,700 in Walmart on August 27, 2024 and sell it today you would earn a total of 15,300 from holding Walmart or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Micron Technology
Performance |
| Timeline |
| Walmart |
| Micron Technology |
Walmart and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Micron Technology
The main advantage of trading using opposite Walmart and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Walmart vs. Micron Technology | Walmart vs. McEwen Mining | Walmart vs. Grupo Sports World | Walmart vs. Applied Materials |
| Micron Technology vs. The Bank of | Micron Technology vs. Burlington Stores | Micron Technology vs. Grupo Carso SAB | Micron Technology vs. United States Steel |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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