Correlation Between Walmart and ARB
Can any of the company-specific risk be diversified away by investing in both Walmart and ARB 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 ARB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and ARB Limited, you can compare the effects of market volatilities on Walmart and ARB 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 ARB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ARB.
Diversification Opportunities for Walmart and ARB
Pay attention - limited upside
The 3 months correlation between Walmart and ARB is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ARB Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB Limited 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 ARB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB Limited has no effect on the direction of Walmart i.e., Walmart and ARB go up and down completely randomly.
Pair Corralation between Walmart and ARB
Considering the 90-day investment horizon Walmart is expected to generate 1.01 times more return on investment than ARB. However, Walmart is 1.01 times more volatile than ARB Limited. It trades about 0.24 of its potential returns per unit of risk. ARB Limited is currently generating about 0.1 per unit of risk. If you would invest 4,980 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,284 from holding Walmart or generate 86.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 83.0% |
| Values | Daily Returns |
Walmart vs. ARB Limited
Performance |
| Timeline |
| Walmart |
| ARB Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and ARB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and ARB
The main advantage of trading using opposite Walmart and ARB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ARB 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 ARB will offset losses from the drop in ARB's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |