Correlation Between Walmart and BROADPEAK
Can any of the company-specific risk be diversified away by investing in both Walmart and BROADPEAK 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 BROADPEAK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and BROADPEAK SA EO, you can compare the effects of market volatilities on Walmart and BROADPEAK 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 BROADPEAK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BROADPEAK.
Diversification Opportunities for Walmart and BROADPEAK
Excellent diversification
The 3 months correlation between Walmart and BROADPEAK is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BROADPEAK SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADPEAK SA EO 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 BROADPEAK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADPEAK SA EO has no effect on the direction of Walmart i.e., Walmart and BROADPEAK go up and down completely randomly.
Pair Corralation between Walmart and BROADPEAK
Assuming the 90 days trading horizon Walmart is expected to generate 0.82 times more return on investment than BROADPEAK. However, Walmart is 1.23 times less risky than BROADPEAK. It trades about 0.23 of its potential returns per unit of risk. BROADPEAK SA EO is currently generating about -0.05 per unit of risk. If you would invest 8,751 in Walmart on October 30, 2024 and sell it today you would earn a total of 369.00 from holding Walmart or generate 4.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.0% |
Values | Daily Returns |
Walmart vs. BROADPEAK SA EO
Performance |
Timeline |
Walmart |
BROADPEAK SA EO |
Walmart and BROADPEAK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and BROADPEAK
The main advantage of trading using opposite Walmart and BROADPEAK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BROADPEAK 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 BROADPEAK will offset losses from the drop in BROADPEAK's long position.Walmart vs. MAGNUM MINING EXP | Walmart vs. INSURANCE AUST GRP | Walmart vs. Vienna Insurance Group | Walmart vs. United Insurance Holdings |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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