Correlation Between Walmart and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Walmart and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Atlas Copco AB, you can compare the effects of market volatilities on Walmart and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Atlas Copco.
Diversification Opportunities for Walmart and Atlas Copco
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Atlas is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Walmart i.e., Walmart and Atlas Copco go up and down completely randomly.
Pair Corralation between Walmart and Atlas Copco
Considering the 90-day investment horizon Walmart is expected to generate 0.67 times more return on investment than Atlas Copco. However, Walmart is 1.49 times less risky than Atlas Copco. It trades about 0.24 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.08 per unit of risk. If you would invest 6,557 in Walmart on August 29, 2024 and sell it today you would earn a total of 2,631 from holding Walmart or generate 40.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Atlas Copco AB
Performance |
| Timeline |
| Walmart |
| Atlas Copco AB |
Walmart and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Atlas Copco
The main advantage of trading using opposite Walmart and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Atlas Copco vs. Parker Hannifin | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Dover | Atlas Copco vs. Illinois Tool Works |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |