Correlation Between Walmart and WisdomTree MidCap
Can any of the company-specific risk be diversified away by investing in both Walmart and WisdomTree MidCap 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 MidCap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and WisdomTree MidCap Earnings, you can compare the effects of market volatilities on Walmart and WisdomTree MidCap 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 MidCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and WisdomTree MidCap.
Diversification Opportunities for Walmart and WisdomTree MidCap
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 MidCap Earnings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree MidCap 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 MidCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree MidCap has no effect on the direction of Walmart i.e., Walmart and WisdomTree MidCap go up and down completely randomly.
Pair Corralation between Walmart and WisdomTree MidCap
Considering the 90-day investment horizon Walmart is expected to generate 0.94 times more return on investment than WisdomTree MidCap. However, Walmart is 1.06 times less risky than WisdomTree MidCap. It trades about 0.25 of its potential returns per unit of risk. WisdomTree MidCap Earnings is currently generating about 0.1 per unit of risk. If you would invest 6,563 in Walmart on September 1, 2024 and sell it today you would earn a total of 2,687 from holding Walmart or generate 40.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Walmart vs. WisdomTree MidCap Earnings
Performance |
| Timeline |
| Walmart |
| WisdomTree MidCap |
Walmart and WisdomTree MidCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and WisdomTree MidCap
The main advantage of trading using opposite Walmart and WisdomTree MidCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, WisdomTree MidCap 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 MidCap will offset losses from the drop in WisdomTree MidCap's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc | Walmart vs. Sprouts Farmers Market |
| WisdomTree MidCap vs. WisdomTree SmallCap Earnings | WisdomTree MidCap vs. WisdomTree Earnings 500 | WisdomTree MidCap vs. WisdomTree MidCap Dividend | WisdomTree MidCap vs. NXG NextGen Infrastructure |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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