Correlation Between Walmart and Bowmo
Can any of the company-specific risk be diversified away by investing in both Walmart and Bowmo 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 Bowmo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Bowmo Inc, you can compare the effects of market volatilities on Walmart and Bowmo 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 Bowmo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Bowmo.
Diversification Opportunities for Walmart and Bowmo
Poor diversification
The 3 months correlation between Walmart and Bowmo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bowmo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowmo 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 Bowmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowmo Inc has no effect on the direction of Walmart i.e., Walmart and Bowmo go up and down completely randomly.
Pair Corralation between Walmart and Bowmo
Considering the 90-day investment horizon Walmart is expected to generate 24.23 times less return on investment than Bowmo. But when comparing it to its historical volatility, Walmart is 45.7 times less risky than Bowmo. It trades about 0.34 of its potential returns per unit of risk. Bowmo Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.18 in Bowmo Inc on August 28, 2024 and sell it today you would earn a total of 0.07 from holding Bowmo Inc or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Bowmo Inc
Performance |
| Timeline |
| Walmart |
| Bowmo Inc |
Walmart and Bowmo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Bowmo
The main advantage of trading using opposite Walmart and Bowmo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Bowmo 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 Bowmo will offset losses from the drop in Bowmo's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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