Correlation Between Walmart and AltaGas
Can any of the company-specific risk be diversified away by investing in both Walmart and AltaGas 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 AltaGas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and AltaGas, you can compare the effects of market volatilities on Walmart and AltaGas 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 AltaGas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and AltaGas.
Diversification Opportunities for Walmart and AltaGas
Very good diversification
The 3 months correlation between Walmart and AltaGas is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AltaGas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltaGas 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 AltaGas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltaGas has no effect on the direction of Walmart i.e., Walmart and AltaGas go up and down completely randomly.
Pair Corralation between Walmart and AltaGas
Considering the 90-day investment horizon Walmart is expected to generate 0.36 times more return on investment than AltaGas. However, Walmart is 2.8 times less risky than AltaGas. It trades about 0.23 of its potential returns per unit of risk. AltaGas is currently generating about 0.05 per unit of risk. If you would invest 6,486 in Walmart on August 24, 2024 and sell it today you would earn a total of 2,353 from holding Walmart or generate 36.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. AltaGas
Performance |
| Timeline |
| Walmart |
| AltaGas |
Walmart and AltaGas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and AltaGas
The main advantage of trading using opposite Walmart and AltaGas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, AltaGas 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 AltaGas will offset losses from the drop in AltaGas' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| AltaGas vs. Southern Company Series | AltaGas vs. Southern Co | AltaGas vs. Talen Energy | AltaGas vs. CMS Energy Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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