Correlation Between Walmart and Andover Bancorp
Can any of the company-specific risk be diversified away by investing in both Walmart and Andover Bancorp 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 Andover Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Andover Bancorp, you can compare the effects of market volatilities on Walmart and Andover Bancorp 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 Andover Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Andover Bancorp.
Diversification Opportunities for Walmart and Andover Bancorp
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walmart and Andover is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Andover Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andover Bancorp 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 Andover Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andover Bancorp has no effect on the direction of Walmart i.e., Walmart and Andover Bancorp go up and down completely randomly.
Pair Corralation between Walmart and Andover Bancorp
Considering the 90-day investment horizon Walmart is expected to generate 1.99 times more return on investment than Andover Bancorp. However, Walmart is 1.99 times more volatile than Andover Bancorp. It trades about 0.59 of its potential returns per unit of risk. Andover Bancorp is currently generating about 0.0 per unit of risk. If you would invest 9,180 in Walmart on November 9, 2024 and sell it today you would earn a total of 1,105 from holding Walmart or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Andover Bancorp
Performance |
| Timeline |
| Walmart |
| Andover Bancorp |
Walmart and Andover Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Andover Bancorp
The main advantage of trading using opposite Walmart and Andover Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Andover Bancorp 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 Andover Bancorp will offset losses from the drop in Andover Bancorp's long position.| Walmart vs. Great Western Minerals | Walmart vs. Enterprise Bancorp | Walmart vs. T Rowe Price | Walmart vs. Aviat Networks |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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