Correlation Between Walmart and AXT
Can any of the company-specific risk be diversified away by investing in both Walmart and AXT 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 AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and AXT Inc, you can compare the effects of market volatilities on Walmart and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and AXT.
Diversification Opportunities for Walmart and AXT
Excellent diversification
The 3 months correlation between Walmart and AXT is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Walmart i.e., Walmart and AXT go up and down completely randomly.
Pair Corralation between Walmart and AXT
Considering the 90-day investment horizon Walmart is expected to generate 0.21 times more return on investment than AXT. However, Walmart is 4.87 times less risky than AXT. It trades about 0.53 of its potential returns per unit of risk. AXT Inc is currently generating about -0.24 per unit of risk. If you would invest 8,139 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,049 from holding Walmart or generate 12.89% 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. AXT Inc
Performance |
| Timeline |
| Walmart |
| AXT Inc |
Walmart and AXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and AXT
The main advantage of trading using opposite Walmart and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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