Correlation Between Walmart and CLP Holdings
Can any of the company-specific risk be diversified away by investing in both Walmart and CLP Holdings 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 CLP Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and CLP Holdings, you can compare the effects of market volatilities on Walmart and CLP Holdings 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 CLP Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and CLP Holdings.
Diversification Opportunities for Walmart and CLP Holdings
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and CLP is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings 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 CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of Walmart i.e., Walmart and CLP Holdings go up and down completely randomly.
Pair Corralation between Walmart and CLP Holdings
Considering the 90-day investment horizon Walmart is expected to under-perform the CLP Holdings. In addition to that, Walmart is 1.37 times more volatile than CLP Holdings. It trades about -0.01 of its total potential returns per unit of risk. CLP Holdings is currently generating about 0.19 per unit of volatility. If you would invest 820.00 in CLP Holdings on October 21, 2024 and sell it today you would earn a total of 24.00 from holding CLP Holdings or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. CLP Holdings
Performance |
| Timeline |
| Walmart |
| CLP Holdings |
Walmart and CLP Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and CLP Holdings
The main advantage of trading using opposite Walmart and CLP Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, CLP Holdings 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 CLP Holdings will offset losses from the drop in CLP Holdings' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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