Correlation Between Walmart and APPLE HOSPITALITY
Can any of the company-specific risk be diversified away by investing in both Walmart and APPLE HOSPITALITY 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 APPLE HOSPITALITY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and APPLE HOSPITALITY REIT, you can compare the effects of market volatilities on Walmart and APPLE HOSPITALITY 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 APPLE HOSPITALITY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and APPLE HOSPITALITY.
Diversification Opportunities for Walmart and APPLE HOSPITALITY
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and APPLE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and APPLE HOSPITALITY REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE HOSPITALITY REIT 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 APPLE HOSPITALITY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE HOSPITALITY REIT has no effect on the direction of Walmart i.e., Walmart and APPLE HOSPITALITY go up and down completely randomly.
Pair Corralation between Walmart and APPLE HOSPITALITY
Assuming the 90 days trading horizon Walmart is expected to generate 0.63 times more return on investment than APPLE HOSPITALITY. However, Walmart is 1.6 times less risky than APPLE HOSPITALITY. It trades about 0.3 of its potential returns per unit of risk. APPLE HOSPITALITY REIT is currently generating about 0.18 per unit of risk. If you would invest 6,844 in Walmart on August 28, 2024 and sell it today you would earn a total of 1,677 from holding Walmart or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. APPLE HOSPITALITY REIT
Performance |
| Timeline |
| Walmart |
| APPLE HOSPITALITY REIT |
Walmart and APPLE HOSPITALITY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and APPLE HOSPITALITY
The main advantage of trading using opposite Walmart and APPLE HOSPITALITY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, APPLE HOSPITALITY 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 APPLE HOSPITALITY will offset losses from the drop in APPLE HOSPITALITY's long position.| Walmart vs. Hollywood Bowl Group | Walmart vs. ANTA SPORTS PRODUCT | Walmart vs. Spirent Communications plc | Walmart vs. Universal Entertainment |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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