Correlation Between Walmart and BZAM
Can any of the company-specific risk be diversified away by investing in both Walmart and BZAM 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 BZAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and BZAM, you can compare the effects of market volatilities on Walmart and BZAM 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 BZAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BZAM.
Diversification Opportunities for Walmart and BZAM
Pay attention - limited upside
The 3 months correlation between Walmart and BZAM is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BZAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BZAM 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 BZAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BZAM has no effect on the direction of Walmart i.e., Walmart and BZAM go up and down completely randomly.
Pair Corralation between Walmart and BZAM
Considering the 90-day investment horizon Walmart is expected to generate 88.57 times less return on investment than BZAM. But when comparing it to its historical volatility, Walmart is 194.22 times less risky than BZAM. It trades about 0.42 of its potential returns per unit of risk. BZAM is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 0.00 in BZAM on August 29, 2024 and sell it today you would earn a total of 0.00 from holding BZAM or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. BZAM
Performance |
| Timeline |
| Walmart |
| BZAM |
Walmart and BZAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and BZAM
The main advantage of trading using opposite Walmart and BZAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BZAM 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 BZAM will offset losses from the drop in BZAM's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| BZAM vs. Southwest Gas Holdings | BZAM vs. WEC Energy Group | BZAM vs. Topbuild Corp | BZAM vs. CenterPoint Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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