Correlation Between Walmart and Avvax
Can any of the company-specific risk be diversified away by investing in both Walmart and Avvax 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 Avvax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Avvax, you can compare the effects of market volatilities on Walmart and Avvax 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 Avvax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Avvax.
Diversification Opportunities for Walmart and Avvax
Poor diversification
The 3 months correlation between Walmart and Avvax is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Avvax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avvax 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 Avvax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avvax has no effect on the direction of Walmart i.e., Walmart and Avvax go up and down completely randomly.
Pair Corralation between Walmart and Avvax
Considering the 90-day investment horizon Walmart is expected to generate 1.51 times more return on investment than Avvax. However, Walmart is 1.51 times more volatile than Avvax. It trades about 0.16 of its potential returns per unit of risk. Avvax is currently generating about 0.12 per unit of risk. If you would invest 5,161 in Walmart on September 12, 2024 and sell it today you would earn a total of 4,294 from holding Walmart or generate 83.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.14% |
| Values | Daily Returns |
Walmart vs. Avvax
Performance |
| Timeline |
| Walmart |
| Avvax |
Walmart and Avvax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Avvax
The main advantage of trading using opposite Walmart and Avvax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Avvax 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 Avvax will offset losses from the drop in Avvax's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Avvax vs. Aqr Large Cap | Avvax vs. Enhanced Large Pany | Avvax vs. Guidemark Large Cap | Avvax vs. T Rowe Price |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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