Correlation Between Walmart and Aritzia
Can any of the company-specific risk be diversified away by investing in both Walmart and Aritzia 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 Aritzia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart Inc CDR and Aritzia, you can compare the effects of market volatilities on Walmart and Aritzia 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 Aritzia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Aritzia.
Diversification Opportunities for Walmart and Aritzia
Very good diversification
The 3 months correlation between Walmart and Aritzia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia 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 Inc CDR are associated (or correlated) with Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Walmart i.e., Walmart and Aritzia go up and down completely randomly.
Pair Corralation between Walmart and Aritzia
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.66 times more return on investment than Aritzia. However, Walmart Inc CDR is 1.52 times less risky than Aritzia. It trades about 0.52 of its potential returns per unit of risk. Aritzia is currently generating about 0.12 per unit of risk. If you would invest 3,568 in Walmart Inc CDR on September 1, 2024 and sell it today you would earn a total of 469.00 from holding Walmart Inc CDR or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Aritzia
Performance |
| Timeline |
| Walmart Inc CDR |
| Aritzia |
Walmart and Aritzia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Aritzia
The main advantage of trading using opposite Walmart and Aritzia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Aritzia 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 Aritzia will offset losses from the drop in Aritzia's long position.| Walmart vs. Amazon CDR | Walmart vs. Berkshire Hathaway CDR | Walmart vs. UnitedHealth Group CDR | Walmart vs. Apple Inc CDR |
| Aritzia vs. Canada Goose Holdings | Aritzia vs. Restaurant Brands International | Aritzia vs. Lightspeed Commerce | Aritzia vs. goeasy |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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