Correlation Between Walmart and Brookfield Office

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Can any of the company-specific risk be diversified away by investing in both Walmart and Brookfield Office 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 Brookfield Office 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 Brookfield Office Properties, you can compare the effects of market volatilities on Walmart and Brookfield Office 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 Brookfield Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Brookfield Office.

Diversification Opportunities for Walmart and Brookfield Office

WalmartBrookfieldDiversified AwayWalmartBrookfieldDiversified Away100%
0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Walmart and Brookfield is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Brookfield Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Office 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 Brookfield Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Office has no effect on the direction of Walmart i.e., Walmart and Brookfield Office go up and down completely randomly.

Pair Corralation between Walmart and Brookfield Office

Assuming the 90 days trading horizon Walmart is expected to generate 71.86 times less return on investment than Brookfield Office. In addition to that, Walmart is 2.34 times more volatile than Brookfield Office Properties. It trades about 0.0 of its total potential returns per unit of risk. Brookfield Office Properties is currently generating about 0.19 per unit of volatility. If you would invest  1,756  in Brookfield Office Properties on November 25, 2024 and sell it today you would earn a total of  58.00  from holding Brookfield Office Properties or generate 3.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Walmart Inc CDR  vs.  Brookfield Office Properties

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510152025
JavaScript chart by amCharts 3.21.15WMT BPO-PG
       Timeline  
Walmart Inc CDR 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Walmart is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb39404142434445
Brookfield Office 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Office Properties are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Office may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb16.51717.51818.5

Walmart and Brookfield Office Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.46-3.34-2.22-1.10.01.162.353.554.745.94 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15WMT BPO-PG
       Returns  

Pair Trading with Walmart and Brookfield Office

The main advantage of trading using opposite Walmart and Brookfield Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Brookfield Office 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 Brookfield Office will offset losses from the drop in Brookfield Office's long position.
The idea behind Walmart Inc CDR and Brookfield Office Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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