Correlation Between Walmart and Cresco Labs
Can any of the company-specific risk be diversified away by investing in both Walmart and Cresco Labs 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 Cresco Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Cresco Labs, you can compare the effects of market volatilities on Walmart and Cresco Labs 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 Cresco Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cresco Labs.
Diversification Opportunities for Walmart and Cresco Labs
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Cresco is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cresco Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cresco Labs 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 Cresco Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cresco Labs has no effect on the direction of Walmart i.e., Walmart and Cresco Labs go up and down completely randomly.
Pair Corralation between Walmart and Cresco Labs
Considering the 90-day investment horizon Walmart is expected to generate 0.22 times more return on investment than Cresco Labs. However, Walmart is 4.57 times less risky than Cresco Labs. It trades about 0.19 of its potential returns per unit of risk. Cresco Labs is currently generating about -0.06 per unit of risk. If you would invest 7,024 in Walmart on October 22, 2024 and sell it today you would earn a total of 2,170 from holding Walmart or generate 30.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Walmart vs. Cresco Labs
Performance |
| Timeline |
| Walmart |
| Cresco Labs |
Walmart and Cresco Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Cresco Labs
The main advantage of trading using opposite Walmart and Cresco Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Cresco Labs 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 Cresco Labs will offset losses from the drop in Cresco Labs' long position.| Walmart vs. Roche Holding AG | Walmart vs. Champions Oncology | Walmart vs. Target 2030 Fund | Walmart vs. The Monarch Cement |
| Cresco Labs vs. Verano Holdings Corp | Cresco Labs vs. AYR Strategies Class | Cresco Labs vs. Green Thumb Industries | Cresco Labs vs. Marimed |
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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