Correlation Between Walmart and Everyday People
Can any of the company-specific risk be diversified away by investing in both Walmart and Everyday People 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 Everyday People 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 Everyday People Financial, you can compare the effects of market volatilities on Walmart and Everyday People 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 Everyday People. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Everyday People.
Diversification Opportunities for Walmart and Everyday People
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Everyday is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Everyday People Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everyday People Financial 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 Everyday People. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everyday People Financial has no effect on the direction of Walmart i.e., Walmart and Everyday People go up and down completely randomly.
Pair Corralation between Walmart and Everyday People
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.32 times more return on investment than Everyday People. However, Walmart Inc CDR is 3.09 times less risky than Everyday People. It trades about 0.33 of its potential returns per unit of risk. Everyday People Financial is currently generating about 0.02 per unit of risk. If you would invest 3,605 in Walmart Inc CDR on August 28, 2024 and sell it today you would earn a total of 286.00 from holding Walmart Inc CDR or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Everyday People Financial
Performance |
| Timeline |
| Walmart Inc CDR |
| Everyday People Financial |
Walmart and Everyday People Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Everyday People
The main advantage of trading using opposite Walmart and Everyday People positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Everyday People 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 Everyday People will offset losses from the drop in Everyday People's long position.| Walmart vs. Ramp Metals | Walmart vs. Aya Gold Silver | Walmart vs. Lion One Metals | Walmart vs. Perseus Mining |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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