Correlation Between Walmart and Electronic Systems
Can any of the company-specific risk be diversified away by investing in both Walmart and Electronic Systems 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 Electronic Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Electronic Systems Technology, you can compare the effects of market volatilities on Walmart and Electronic Systems 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 Electronic Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Electronic Systems.
Diversification Opportunities for Walmart and Electronic Systems
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Electronic is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Electronic Systems Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Systems 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 Electronic Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Systems has no effect on the direction of Walmart i.e., Walmart and Electronic Systems go up and down completely randomly.
Pair Corralation between Walmart and Electronic Systems
Considering the 90-day investment horizon Walmart is expected to generate 0.11 times more return on investment than Electronic Systems. However, Walmart is 8.89 times less risky than Electronic Systems. It trades about 0.45 of its potential returns per unit of risk. Electronic Systems Technology is currently generating about -0.16 per unit of risk. If you would invest 9,000 in Walmart on November 3, 2024 and sell it today you would earn a total of 816.00 from holding Walmart or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Electronic Systems Technology
Performance |
| Timeline |
| Walmart |
| Electronic Systems |
Walmart and Electronic Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Electronic Systems
The main advantage of trading using opposite Walmart and Electronic Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Electronic Systems 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 Electronic Systems will offset losses from the drop in Electronic Systems' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General |
| Electronic Systems vs. BeWhere Holdings | Electronic Systems vs. Frequency Electronics | Electronic Systems vs. Wialan Technologies | Electronic Systems vs. TPT Global Tech |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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