Correlation Between Walmart and ACGR
Can any of the company-specific risk be diversified away by investing in both Walmart and ACGR 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 ACGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and ACGR, you can compare the effects of market volatilities on Walmart and ACGR 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 ACGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ACGR.
Diversification Opportunities for Walmart and ACGR
Very weak diversification
The 3 months correlation between Walmart and ACGR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ACGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACGR 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 ACGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACGR has no effect on the direction of Walmart i.e., Walmart and ACGR go up and down completely randomly.
Pair Corralation between Walmart and ACGR
Considering the 90-day investment horizon Walmart is expected to generate 0.79 times more return on investment than ACGR. However, Walmart is 1.27 times less risky than ACGR. It trades about 0.04 of its potential returns per unit of risk. ACGR is currently generating about -0.01 per unit of risk. If you would invest 9,268 in Walmart on October 25, 2024 and sell it today you would earn a total of 55.00 from holding Walmart or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. ACGR
Performance |
| Timeline |
| Walmart |
| ACGR |
Walmart and ACGR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and ACGR
The main advantage of trading using opposite Walmart and ACGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ACGR 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 ACGR will offset losses from the drop in ACGR's long position.| Walmart vs. Bank of America | Walmart vs. RLJ Lodging Trust | Walmart vs. PennyMac Finl Svcs | Walmart vs. Brandywine Realty Trust |
| ACGR vs. FT Vest Equity | ACGR vs. Northern Lights | ACGR vs. Dimensional International High | ACGR vs. First Trust Exchange Traded |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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