Correlation Between Walmart and BQE Water
Can any of the company-specific risk be diversified away by investing in both Walmart and BQE Water 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 BQE Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and BQE Water, you can compare the effects of market volatilities on Walmart and BQE Water 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 BQE Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BQE Water.
Diversification Opportunities for Walmart and BQE Water
Pay attention - limited upside
The 3 months correlation between Walmart and BQE is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BQE Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BQE Water 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 BQE Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BQE Water has no effect on the direction of Walmart i.e., Walmart and BQE Water go up and down completely randomly.
Pair Corralation between Walmart and BQE Water
Considering the 90-day investment horizon Walmart is expected to generate 0.33 times more return on investment than BQE Water. However, Walmart is 2.99 times less risky than BQE Water. It trades about 0.24 of its potential returns per unit of risk. BQE Water is currently generating about -0.02 per unit of risk. If you would invest 6,557 in Walmart on August 29, 2024 and sell it today you would earn a total of 2,631 from holding Walmart or generate 40.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Walmart vs. BQE Water
Performance |
| Timeline |
| Walmart |
| BQE Water |
Walmart and BQE Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and BQE Water
The main advantage of trading using opposite Walmart and BQE Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BQE Water 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 BQE Water will offset losses from the drop in BQE Water's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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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