Correlation Between Walmart and Brembo SpA
Can any of the company-specific risk be diversified away by investing in both Walmart and Brembo SpA 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 Brembo SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Brembo SpA, you can compare the effects of market volatilities on Walmart and Brembo SpA 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 Brembo SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Brembo SpA.
Diversification Opportunities for Walmart and Brembo SpA
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Brembo is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Brembo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brembo SpA 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 Brembo SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brembo SpA has no effect on the direction of Walmart i.e., Walmart and Brembo SpA go up and down completely randomly.
Pair Corralation between Walmart and Brembo SpA
Considering the 90-day investment horizon Walmart is expected to generate 0.31 times more return on investment than Brembo SpA. However, Walmart is 3.23 times less risky than Brembo SpA. It trades about 0.54 of its potential returns per unit of risk. Brembo SpA is currently generating about -0.21 per unit of risk. If you would invest 8,195 in Walmart on September 1, 2024 and sell it today you would earn a total of 1,055 from holding Walmart or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Brembo SpA
Performance |
| Timeline |
| Walmart |
| Brembo SpA |
Walmart and Brembo SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Brembo SpA
The main advantage of trading using opposite Walmart and Brembo SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Brembo SpA 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 Brembo SpA will offset losses from the drop in Brembo SpA's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc |
| Brembo SpA vs. Allison Transmission Holdings | Brembo SpA vs. Luminar Technologies | Brembo SpA vs. Quantumscape Corp | Brembo SpA vs. Lear Corporation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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