Correlation Between Walmart and Citizens Bancorp
Can any of the company-specific risk be diversified away by investing in both Walmart and Citizens Bancorp 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 Citizens Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Citizens Bancorp of, you can compare the effects of market volatilities on Walmart and Citizens Bancorp 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 Citizens Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Citizens Bancorp.
Diversification Opportunities for Walmart and Citizens Bancorp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Citizens is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Citizens Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp has no effect on the direction of Walmart i.e., Walmart and Citizens Bancorp go up and down completely randomly.
Pair Corralation between Walmart and Citizens Bancorp
Considering the 90-day investment horizon Walmart is expected to generate 0.34 times more return on investment than Citizens Bancorp. However, Walmart is 2.95 times less risky than Citizens Bancorp. It trades about 0.12 of its potential returns per unit of risk. Citizens Bancorp of is currently generating about 0.02 per unit of risk. If you would invest 4,856 in Walmart on August 27, 2024 and sell it today you would earn a total of 4,188 from holding Walmart or generate 86.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 81.45% |
| Values | Daily Returns |
Walmart vs. Citizens Bancorp of
Performance |
| Timeline |
| Walmart |
| Citizens Bancorp |
Walmart and Citizens Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Citizens Bancorp
The main advantage of trading using opposite Walmart and Citizens Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Citizens Bancorp 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 Citizens Bancorp will offset losses from the drop in Citizens Bancorp's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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