Correlation Between Walmart and Community Heritage
Can any of the company-specific risk be diversified away by investing in both Walmart and Community Heritage 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 Community Heritage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Community Heritage Financial, you can compare the effects of market volatilities on Walmart and Community Heritage 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 Community Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Community Heritage.
Diversification Opportunities for Walmart and Community Heritage
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Community is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of Walmart i.e., Walmart and Community Heritage go up and down completely randomly.
Pair Corralation between Walmart and Community Heritage
Considering the 90-day investment horizon Walmart is expected to generate 1.97 times more return on investment than Community Heritage. However, Walmart is 1.97 times more volatile than Community Heritage Financial. It trades about 0.39 of its potential returns per unit of risk. Community Heritage Financial is currently generating about 0.35 per unit of risk. If you would invest 9,143 in Walmart on November 5, 2024 and sell it today you would earn a total of 673.00 from holding Walmart or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Walmart vs. Community Heritage Financial
Performance |
| Timeline |
| Walmart |
| Community Heritage |
Walmart and Community Heritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Community Heritage
The main advantage of trading using opposite Walmart and Community Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Community Heritage 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 Community Heritage will offset losses from the drop in Community Heritage's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General |
| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark Bancorp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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