Correlation Between Walmart and REGIONS FINANCIAL
Can any of the company-specific risk be diversified away by investing in both Walmart and REGIONS FINANCIAL 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 REGIONS FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and REGIONS FINANCIAL PFD, you can compare the effects of market volatilities on Walmart and REGIONS FINANCIAL 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 REGIONS FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and REGIONS FINANCIAL.
Diversification Opportunities for Walmart and REGIONS FINANCIAL
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and REGIONS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and REGIONS FINANCIAL PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGIONS FINANCIAL PFD 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 REGIONS FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGIONS FINANCIAL PFD has no effect on the direction of Walmart i.e., Walmart and REGIONS FINANCIAL go up and down completely randomly.
Pair Corralation between Walmart and REGIONS FINANCIAL
Assuming the 90 days trading horizon Walmart is expected to generate 1.1 times more return on investment than REGIONS FINANCIAL. However, Walmart is 1.1 times more volatile than REGIONS FINANCIAL PFD. It trades about 0.2 of its potential returns per unit of risk. REGIONS FINANCIAL PFD is currently generating about 0.07 per unit of risk. If you would invest 5,475 in Walmart on September 1, 2024 and sell it today you would earn a total of 3,261 from holding Walmart or generate 59.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.48% |
| Values | Daily Returns |
Walmart vs. REGIONS FINANCIAL PFD
Performance |
| Timeline |
| Walmart |
| REGIONS FINANCIAL PFD |
Walmart and REGIONS FINANCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and REGIONS FINANCIAL
The main advantage of trading using opposite Walmart and REGIONS FINANCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, REGIONS FINANCIAL 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 REGIONS FINANCIAL will offset losses from the drop in REGIONS FINANCIAL's long position.| Walmart vs. DELTA AIR LINES | Walmart vs. Spirent Communications plc | Walmart vs. Fair Isaac Corp | Walmart vs. Alaska Air Group |
| REGIONS FINANCIAL vs. INDOFOOD AGRI RES | REGIONS FINANCIAL vs. JJ SNACK FOODS | REGIONS FINANCIAL vs. SENECA FOODS A | REGIONS FINANCIAL vs. Universal Display |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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