Correlation Between Walmart and Better World
Can any of the company-specific risk be diversified away by investing in both Walmart and Better World 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 Better World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Better World Acquisition, you can compare the effects of market volatilities on Walmart and Better World 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 Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Better World.
Diversification Opportunities for Walmart and Better World
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and Better is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Better World Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Acquisition 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 Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Acquisition has no effect on the direction of Walmart i.e., Walmart and Better World go up and down completely randomly.
Pair Corralation between Walmart and Better World
If you would invest 9,268 in Walmart on October 25, 2024 and sell it today you would earn a total of 113.00 from holding Walmart or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 5.26% |
| Values | Daily Returns |
Walmart vs. Better World Acquisition
Performance |
| Timeline |
| Walmart |
| Better World Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Better World
The main advantage of trading using opposite Walmart and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World's long position.| Walmart vs. Bank of America | Walmart vs. RLJ Lodging Trust | Walmart vs. PennyMac Finl Svcs | Walmart vs. Brandywine Realty Trust |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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