Correlation Between Walmart and Air Liquide
Can any of the company-specific risk be diversified away by investing in both Walmart and Air Liquide 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 Air Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Air Liquide SA, you can compare the effects of market volatilities on Walmart and Air Liquide 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 Air Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Air Liquide.
Diversification Opportunities for Walmart and Air Liquide
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Air is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Air Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Liquide SA 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 Air Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Liquide SA has no effect on the direction of Walmart i.e., Walmart and Air Liquide go up and down completely randomly.
Pair Corralation between Walmart and Air Liquide
Considering the 90-day investment horizon Walmart is expected to generate 0.77 times more return on investment than Air Liquide. However, Walmart is 1.29 times less risky than Air Liquide. It trades about 0.22 of its potential returns per unit of risk. Air Liquide SA is currently generating about -0.02 per unit of risk. If you would invest 5,121 in Walmart on August 26, 2024 and sell it today you would earn a total of 3,923 from holding Walmart or generate 76.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Air Liquide SA
Performance |
| Timeline |
| Walmart |
| Air Liquide SA |
Walmart and Air Liquide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Air Liquide
The main advantage of trading using opposite Walmart and Air Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Air Liquide 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 Air Liquide will offset losses from the drop in Air Liquide's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Air Liquide vs. Asia Carbon Industries | Air Liquide vs. Akzo Nobel NV | Air Liquide vs. Avoca LLC | Air Liquide vs. AGC Inc ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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