Correlation Between Walmart and Wajax
Can any of the company-specific risk be diversified away by investing in both Walmart and Wajax 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 Wajax 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 Wajax, you can compare the effects of market volatilities on Walmart and Wajax 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 Wajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Wajax.
Diversification Opportunities for Walmart and Wajax
Excellent diversification
The 3 months correlation between Walmart and Wajax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Wajax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wajax 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 Wajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wajax has no effect on the direction of Walmart i.e., Walmart and Wajax go up and down completely randomly.
Pair Corralation between Walmart and Wajax
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.25 times more return on investment than Wajax. However, Walmart Inc CDR is 3.94 times less risky than Wajax. It trades about 0.5 of its potential returns per unit of risk. Wajax is currently generating about -0.03 per unit of risk. If you would invest 3,589 in Walmart Inc CDR on September 3, 2024 and sell it today you would earn a total of 448.00 from holding Walmart Inc CDR or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Wajax
Performance |
| Timeline |
| Walmart Inc CDR |
| Wajax |
Walmart and Wajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Wajax
The main advantage of trading using opposite Walmart and Wajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Wajax 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 Wajax will offset losses from the drop in Wajax's long position.| Walmart vs. Xtract One Technologies | Walmart vs. Enduro Metals Corp | Walmart vs. Wishpond Technologies | Walmart vs. Arbor Metals Corp |
| Wajax vs. Russel Metals | Wajax vs. Bird Construction | Wajax vs. Finning International | Wajax vs. Mullen Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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