Correlation Between Walmart and Federal Home
Can any of the company-specific risk be diversified away by investing in both Walmart and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Federal Home 530, you can compare the effects of market volatilities on Walmart and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Federal Home.
Diversification Opportunities for Walmart and Federal Home
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Federal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Federal Home 530 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home 530 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home 530 has no effect on the direction of Walmart i.e., Walmart and Federal Home go up and down completely randomly.
Pair Corralation between Walmart and Federal Home
Considering the 90-day investment horizon Walmart is expected to generate 3.72 times less return on investment than Federal Home. But when comparing it to its historical volatility, Walmart is 5.03 times less risky than Federal Home. It trades about 0.17 of its potential returns per unit of risk. Federal Home 530 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Federal Home 530 on September 1, 2024 and sell it today you would earn a total of 1,275 from holding Federal Home 530 or generate 445.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Federal Home 530
Performance |
| Timeline |
| Walmart |
| Federal Home 530 |
Walmart and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Federal Home
The main advantage of trading using opposite Walmart and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc |
| Federal Home vs. EvoAir Holdings | Federal Home vs. Zhihu Inc ADR | Federal Home vs. Asure Software | Federal Home vs. AerSale Corp |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |