Correlation Between Walmart and Dimensional Core
Can any of the company-specific risk be diversified away by investing in both Walmart and Dimensional Core 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 Dimensional Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Dimensional Core Equity, you can compare the effects of market volatilities on Walmart and Dimensional Core 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 Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Dimensional Core.
Diversification Opportunities for Walmart and Dimensional Core
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Dimensional is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity 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 Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of Walmart i.e., Walmart and Dimensional Core go up and down completely randomly.
Pair Corralation between Walmart and Dimensional Core
Considering the 90-day investment horizon Walmart is expected to generate 1.25 times more return on investment than Dimensional Core. However, Walmart is 1.25 times more volatile than Dimensional Core Equity. It trades about 0.4 of its potential returns per unit of risk. Dimensional Core Equity is currently generating about 0.22 per unit of risk. If you would invest 8,275 in Walmart on August 29, 2024 and sell it today you would earn a total of 856.00 from holding Walmart or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Dimensional Core Equity
Performance |
| Timeline |
| Walmart |
| Dimensional Core Equity |
Walmart and Dimensional Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Dimensional Core
The main advantage of trading using opposite Walmart and Dimensional Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Dimensional Core 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 Dimensional Core will offset losses from the drop in Dimensional Core's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Dimensional Core vs. Dimensional International Core | Dimensional Core vs. Dimensional Emerging Core | Dimensional Core vs. Dimensional Core Equity | Dimensional Core vs. Dimensional Small Cap |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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