Correlation Between Walmart and WisdomTree Total
Can any of the company-specific risk be diversified away by investing in both Walmart and WisdomTree Total 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 WisdomTree Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and WisdomTree Total Dividend, you can compare the effects of market volatilities on Walmart and WisdomTree Total 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 WisdomTree Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and WisdomTree Total.
Diversification Opportunities for Walmart and WisdomTree Total
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and WisdomTree Total Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Total Dividend 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 WisdomTree Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Total Dividend has no effect on the direction of Walmart i.e., Walmart and WisdomTree Total go up and down completely randomly.
Pair Corralation between Walmart and WisdomTree Total
Considering the 90-day investment horizon Walmart is expected to generate 1.47 times more return on investment than WisdomTree Total. However, Walmart is 1.47 times more volatile than WisdomTree Total Dividend. It trades about 0.49 of its potential returns per unit of risk. WisdomTree Total Dividend is currently generating about 0.26 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. WisdomTree Total Dividend
Performance |
| Timeline |
| Walmart |
| WisdomTree Total Dividend |
Walmart and WisdomTree Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and WisdomTree Total
The main advantage of trading using opposite Walmart and WisdomTree Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, WisdomTree Total 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 WisdomTree Total will offset losses from the drop in WisdomTree Total's long position.| Walmart vs. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Village Super Market |
| WisdomTree Total vs. WisdomTree LargeCap Dividend | WisdomTree Total vs. WisdomTree SmallCap Dividend | WisdomTree Total vs. WisdomTree High Dividend | WisdomTree Total vs. WisdomTree MidCap Dividend |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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