Correlation Between Walmart and First National
Can any of the company-specific risk be diversified away by investing in both Walmart and First National 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 First National 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 First National Financial, you can compare the effects of market volatilities on Walmart and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and First National.
Diversification Opportunities for Walmart and First National
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and First is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of Walmart i.e., Walmart and First National go up and down completely randomly.
Pair Corralation between Walmart and First National
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.23 times more return on investment than First National. However, Walmart is 1.23 times more volatile than First National Financial. It trades about 0.52 of its potential returns per unit of risk. First National Financial is currently generating about 0.11 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. First National Financial
Performance |
| Timeline |
| Walmart Inc CDR |
| First National Financial |
Walmart and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and First National
The main advantage of trading using opposite Walmart and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Walmart vs. Amazon CDR | Walmart vs. Berkshire Hathaway CDR | Walmart vs. UnitedHealth Group CDR | Walmart vs. Apple Inc CDR |
| First National vs. Champion Gaming Group | First National vs. Endeavour Silver Corp | First National vs. Nicola Mining | First National vs. Perseus Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |