Correlation Between Walmart and Silicon Motion
Can any of the company-specific risk be diversified away by investing in both Walmart and Silicon Motion 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 Silicon Motion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Silicon Motion Technology, you can compare the effects of market volatilities on Walmart and Silicon Motion 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 Silicon Motion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Silicon Motion.
Diversification Opportunities for Walmart and Silicon Motion
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Silicon is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Silicon Motion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silicon Motion Technology 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 Silicon Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silicon Motion Technology has no effect on the direction of Walmart i.e., Walmart and Silicon Motion go up and down completely randomly.
Pair Corralation between Walmart and Silicon Motion
Assuming the 90 days trading horizon Walmart is expected to generate 0.49 times more return on investment than Silicon Motion. However, Walmart is 2.02 times less risky than Silicon Motion. It trades about 0.13 of its potential returns per unit of risk. Silicon Motion Technology is currently generating about -0.01 per unit of risk. If you would invest 4,529 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,207 from holding Walmart or generate 92.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Silicon Motion Technology
Performance |
| Timeline |
| Walmart |
| Silicon Motion Technology |
Walmart and Silicon Motion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Silicon Motion
The main advantage of trading using opposite Walmart and Silicon Motion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Silicon Motion 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 Silicon Motion will offset losses from the drop in Silicon Motion's long position.| Walmart vs. Silicon Motion Technology | Walmart vs. Soken Chemical Engineering | Walmart vs. National Beverage Corp | Walmart vs. Tsingtao Brewery |
| Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc | Silicon Motion vs. Apple Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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