Correlation Between Walmart and Focus Home
Can any of the company-specific risk be diversified away by investing in both Walmart and Focus Home 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 Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Focus Home Interactive, you can compare the effects of market volatilities on Walmart and Focus Home 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 Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Focus Home.
Diversification Opportunities for Walmart and Focus Home
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Focus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Walmart i.e., Walmart and Focus Home go up and down completely randomly.
Pair Corralation between Walmart and Focus Home
Assuming the 90 days trading horizon Walmart is expected to generate 2.02 times less return on investment than Focus Home. But when comparing it to its historical volatility, Walmart is 4.52 times less risky than Focus Home. It trades about 0.23 of its potential returns per unit of risk. Focus Home Interactive is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,152 in Focus Home Interactive on September 15, 2024 and sell it today you would earn a total of 933.00 from holding Focus Home Interactive or generate 80.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Focus Home Interactive
Performance |
| Timeline |
| Walmart |
| Focus Home Interactive |
Walmart and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Focus Home
The main advantage of trading using opposite Walmart and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| Walmart vs. PLAYSTUDIOS A DL 0001 | Walmart vs. XLMedia PLC | Walmart vs. HF SINCLAIR P | Walmart vs. Norwegian Air Shuttle |
| Focus Home vs. NEXON Co | Focus Home vs. Take Two Interactive Software | Focus Home vs. Superior Plus Corp | Focus Home vs. SIVERS SEMICONDUCTORS AB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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