Correlation Between Walmart and Xtract One
Can any of the company-specific risk be diversified away by investing in both Walmart and Xtract One 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 Xtract One 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 Xtract One Technologies, you can compare the effects of market volatilities on Walmart and Xtract One 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 Xtract One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Xtract One.
Diversification Opportunities for Walmart and Xtract One
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Xtract is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Xtract One Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtract One Technologies 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 Xtract One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtract One Technologies has no effect on the direction of Walmart i.e., Walmart and Xtract One go up and down completely randomly.
Pair Corralation between Walmart and Xtract One
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.31 times more return on investment than Xtract One. However, Walmart Inc CDR is 3.19 times less risky than Xtract One. It trades about 0.16 of its potential returns per unit of risk. Xtract One Technologies is currently generating about -0.02 per unit of risk. If you would invest 2,283 in Walmart Inc CDR on September 12, 2024 and sell it today you would earn a total of 1,826 from holding Walmart Inc CDR or generate 79.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Xtract One Technologies
Performance |
| Timeline |
| Walmart Inc CDR |
| Xtract One Technologies |
Walmart and Xtract One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Xtract One
The main advantage of trading using opposite Walmart and Xtract One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Xtract One 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 Xtract One will offset losses from the drop in Xtract One's long position.| Walmart vs. Evertz Technologies Limited | Walmart vs. Algonquin Power Utilities | Walmart vs. Data Communications Management | Walmart vs. Verizon Communications CDR |
| Xtract One vs. Apple Inc CDR | Xtract One vs. NVIDIA CDR | Xtract One vs. Microsoft Corp CDR | Xtract One vs. Amazon CDR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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