Correlation Between Walmart and Manulife Finl
Can any of the company-specific risk be diversified away by investing in both Walmart and Manulife Finl 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 Manulife Finl 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 Manulife Finl Srs, you can compare the effects of market volatilities on Walmart and Manulife Finl 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 Manulife Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Manulife Finl.
Diversification Opportunities for Walmart and Manulife Finl
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Manulife is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Manulife Finl Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Finl Srs 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 Manulife Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Finl Srs has no effect on the direction of Walmart i.e., Walmart and Manulife Finl go up and down completely randomly.
Pair Corralation between Walmart and Manulife Finl
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.25 times more return on investment than Manulife Finl. However, Walmart is 1.25 times more volatile than Manulife Finl Srs. It trades about 0.12 of its potential returns per unit of risk. Manulife Finl Srs is currently generating about 0.04 per unit of risk. If you would invest 2,167 in Walmart Inc CDR on August 29, 2024 and sell it today you would earn a total of 1,829 from holding Walmart Inc CDR or generate 84.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Manulife Finl Srs
Performance |
| Timeline |
| Walmart Inc CDR |
| Manulife Finl Srs |
Walmart and Manulife Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Manulife Finl
The main advantage of trading using opposite Walmart and Manulife Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Manulife Finl 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 Manulife Finl will offset losses from the drop in Manulife Finl's long position.| Walmart vs. Nicola Mining | Walmart vs. Northstar Clean Technologies | Walmart vs. North American Construction | Walmart vs. Air Canada |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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