Correlation Between Walmart and Card Factory
Can any of the company-specific risk be diversified away by investing in both Walmart and Card Factory 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 Card Factory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Card Factory plc, you can compare the effects of market volatilities on Walmart and Card Factory 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 Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Card Factory.
Diversification Opportunities for Walmart and Card Factory
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Card is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of Walmart i.e., Walmart and Card Factory go up and down completely randomly.
Pair Corralation between Walmart and Card Factory
Considering the 90-day investment horizon Walmart is expected to generate 0.21 times more return on investment than Card Factory. However, Walmart is 4.72 times less risky than Card Factory. It trades about 0.55 of its potential returns per unit of risk. Card Factory plc is currently generating about -0.2 per unit of risk. If you would invest 8,139 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,111 from holding Walmart or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. Card Factory plc
Performance |
| Timeline |
| Walmart |
| Card Factory plc |
Walmart and Card Factory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Card Factory
The main advantage of trading using opposite Walmart and Card Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Card Factory 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 Card Factory will offset losses from the drop in Card Factory's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Card Factory vs. Ulta Beauty | Card Factory vs. Williams Sonoma | Card Factory vs. Dicks Sporting Goods | Card Factory vs. Best Buy Co |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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