Correlation Between Walmart and HR Real
Can any of the company-specific risk be diversified away by investing in both Walmart and HR Real 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 HR Real 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 HR Real Estate, you can compare the effects of market volatilities on Walmart and HR Real 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 HR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and HR Real.
Diversification Opportunities for Walmart and HR Real
Excellent diversification
The 3 months correlation between Walmart and HR-UN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and HR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Real Estate 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 HR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Real Estate has no effect on the direction of Walmart i.e., Walmart and HR Real go up and down completely randomly.
Pair Corralation between Walmart and HR Real
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.89 times more return on investment than HR Real. However, Walmart Inc CDR is 1.13 times less risky than HR Real. It trades about 0.52 of its potential returns per unit of risk. HR Real Estate is currently generating about -0.22 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. HR Real Estate
Performance |
| Timeline |
| Walmart Inc CDR |
| HR Real Estate |
Walmart and HR Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and HR Real
The main advantage of trading using opposite Walmart and HR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, HR Real 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 HR Real will offset losses from the drop in HR Real's long position.| Walmart vs. Amazon CDR | Walmart vs. Berkshire Hathaway CDR | Walmart vs. UnitedHealth Group CDR | Walmart vs. Apple Inc CDR |
| HR Real vs. RioCan Real Estate | HR Real vs. Canadian Apartment Properties | HR Real vs. SmartCentres Real Estate | HR Real vs. Allied Properties Real |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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