Correlation Between Walmart and Eat Beyond
Can any of the company-specific risk be diversified away by investing in both Walmart and Eat Beyond 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 Eat Beyond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Eat Beyond Global, you can compare the effects of market volatilities on Walmart and Eat Beyond 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 Eat Beyond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Eat Beyond.
Diversification Opportunities for Walmart and Eat Beyond
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Walmart and Eat is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Eat Beyond Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eat Beyond Global 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 Eat Beyond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eat Beyond Global has no effect on the direction of Walmart i.e., Walmart and Eat Beyond go up and down completely randomly.
Pair Corralation between Walmart and Eat Beyond
Considering the 90-day investment horizon Walmart is expected to generate 30.31 times less return on investment than Eat Beyond. But when comparing it to its historical volatility, Walmart is 45.97 times less risky than Eat Beyond. It trades about 0.34 of its potential returns per unit of risk. Eat Beyond Global is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Eat Beyond Global on August 28, 2024 and sell it today you would earn a total of 5.30 from holding Eat Beyond Global or generate 129.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Eat Beyond Global
Performance |
| Timeline |
| Walmart |
| Eat Beyond Global |
Walmart and Eat Beyond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Eat Beyond
The main advantage of trading using opposite Walmart and Eat Beyond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Eat Beyond 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 Eat Beyond will offset losses from the drop in Eat Beyond's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Eat Beyond vs. Elysee Development Corp | Eat Beyond vs. Azimut Holding SpA | Eat Beyond vs. Ameritrans Capital Corp | Eat Beyond vs. Aimia Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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