Correlation Between Walmart and A1
Can any of the company-specific risk be diversified away by investing in both Walmart and A1 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 A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and A1 Group, you can compare the effects of market volatilities on Walmart and A1 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 A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and A1.
Diversification Opportunities for Walmart and A1
Pay attention - limited upside
The 3 months correlation between Walmart and A1 is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group 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 A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of Walmart i.e., Walmart and A1 go up and down completely randomly.
Pair Corralation between Walmart and A1
Considering the 90-day investment horizon Walmart is expected to generate 1.68 times less return on investment than A1. But when comparing it to its historical volatility, Walmart is 11.96 times less risky than A1. It trades about 0.15 of its potential returns per unit of risk. A1 Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2.01 in A1 Group on September 2, 2024 and sell it today you would lose (1.81) from holding A1 Group or give up 90.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. A1 Group
Performance |
| Timeline |
| Walmart |
| A1 Group |
Walmart and A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and A1
The main advantage of trading using opposite Walmart and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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