Correlation Between Walmart and EA Series
Can any of the company-specific risk be diversified away by investing in both Walmart and EA Series 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 EA Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and EA Series Trust, you can compare the effects of market volatilities on Walmart and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and EA Series.
Diversification Opportunities for Walmart and EA Series
Very poor diversification
The 3 months correlation between Walmart and BUXX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Walmart i.e., Walmart and EA Series go up and down completely randomly.
Pair Corralation between Walmart and EA Series
Considering the 90-day investment horizon Walmart is expected to generate 13.69 times more return on investment than EA Series. However, Walmart is 13.69 times more volatile than EA Series Trust. It trades about 0.53 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.25 per unit of risk. If you would invest 8,245 in Walmart on September 3, 2024 and sell it today you would earn a total of 1,005 from holding Walmart or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. EA Series Trust
Performance |
| Timeline |
| Walmart |
| EA Series Trust |
Walmart and EA Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and EA Series
The main advantage of trading using opposite Walmart and EA Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, EA Series 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 EA Series will offset losses from the drop in EA Series' long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| EA Series vs. SCOR PK | EA Series vs. HUMANA INC | EA Series vs. Aquagold International | EA Series vs. Barloworld Ltd ADR |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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