Correlation Between Walmart and Bce
Can any of the company-specific risk be diversified away by investing in both Walmart and Bce 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 Bce 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 Bce Inc Pref, you can compare the effects of market volatilities on Walmart and Bce 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 Bce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Bce.
Diversification Opportunities for Walmart and Bce
Significant diversification
The 3 months correlation between Walmart and Bce is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Bce Inc Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bce Inc Pref 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 Bce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bce Inc Pref has no effect on the direction of Walmart i.e., Walmart and Bce go up and down completely randomly.
Pair Corralation between Walmart and Bce
Assuming the 90 days trading horizon Walmart is expected to generate 3.34 times less return on investment than Bce. But when comparing it to its historical volatility, Walmart Inc CDR is 1.15 times less risky than Bce. It trades about 0.15 of its potential returns per unit of risk. Bce Inc Pref is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 1,602 in Bce Inc Pref on October 24, 2024 and sell it today you would earn a total of 155.00 from holding Bce Inc Pref or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Bce Inc Pref
Performance |
| Timeline |
| Walmart Inc CDR |
| Bce Inc Pref |
Walmart and Bce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Bce
The main advantage of trading using opposite Walmart and Bce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Bce 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 Bce will offset losses from the drop in Bce's long position.| Walmart vs. Canadian General Investments | Walmart vs. AGF Management Limited | Walmart vs. Primaris Retail RE | Walmart vs. Dream Office Real |
| Bce vs. WELL Health Technologies | Bce vs. HPQ Silicon Resources | Bce vs. CI Financial Corp | Bce vs. NorthWest Healthcare Properties |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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