Correlation Between Walmart and China Infrastructure
Can any of the company-specific risk be diversified away by investing in both Walmart and China Infrastructure 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 China Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and China Infrastructure Construction, you can compare the effects of market volatilities on Walmart and China Infrastructure 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 China Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and China Infrastructure.
Diversification Opportunities for Walmart and China Infrastructure
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and China Infrastructure Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Infrastructure 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 China Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Infrastructure has no effect on the direction of Walmart i.e., Walmart and China Infrastructure go up and down completely randomly.
Pair Corralation between Walmart and China Infrastructure
Considering the 90-day investment horizon Walmart is expected to generate 0.08 times more return on investment than China Infrastructure. However, Walmart is 11.91 times less risky than China Infrastructure. It trades about 0.13 of its potential returns per unit of risk. China Infrastructure Construction is currently generating about 0.01 per unit of risk. If you would invest 4,838 in Walmart on August 29, 2024 and sell it today you would earn a total of 4,293 from holding Walmart or generate 88.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 31.52% |
| Values | Daily Returns |
Walmart vs. China Infrastructure Construct
Performance |
| Timeline |
| Walmart |
| China Infrastructure |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and China Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and China Infrastructure
The main advantage of trading using opposite Walmart and China Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, China Infrastructure 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 China Infrastructure will offset losses from the drop in China Infrastructure's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| China Infrastructure vs. Medicine Man Technologies | China Infrastructure vs. Kona Gold Solutions | China Infrastructure vs. Green Thumb Industries | China Infrastructure vs. Cann American Corp |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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