Correlation Between Walmart and Americann
Can any of the company-specific risk be diversified away by investing in both Walmart and Americann 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 Americann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Americann, you can compare the effects of market volatilities on Walmart and Americann 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 Americann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Americann.
Diversification Opportunities for Walmart and Americann
Excellent diversification
The 3 months correlation between Walmart and Americann is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Americann in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americann 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 Americann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americann has no effect on the direction of Walmart i.e., Walmart and Americann go up and down completely randomly.
Pair Corralation between Walmart and Americann
Considering the 90-day investment horizon Walmart is expected to generate 4.23 times less return on investment than Americann. But when comparing it to its historical volatility, Walmart is 13.75 times less risky than Americann. It trades about 0.13 of its potential returns per unit of risk. Americann is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Americann on September 4, 2024 and sell it today you would lose (13.90) from holding Americann or give up 86.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Walmart vs. Americann
Performance |
| Timeline |
| Walmart |
| Americann |
Walmart and Americann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Americann
The main advantage of trading using opposite Walmart and Americann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Americann 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 Americann will offset losses from the drop in Americann's long position.| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
| Americann vs. Asia Pptys | Americann vs. Aztec Land Comb | Americann vs. Ambase Corp | Americann vs. Agritek Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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