Correlation Between Walmart and 1ST SUMMIT
Can any of the company-specific risk be diversified away by investing in both Walmart and 1ST SUMMIT 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 1ST SUMMIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on Walmart and 1ST SUMMIT 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 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 1ST SUMMIT.
Diversification Opportunities for Walmart and 1ST SUMMIT
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and 1ST is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP 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 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of Walmart i.e., Walmart and 1ST SUMMIT go up and down completely randomly.
Pair Corralation between Walmart and 1ST SUMMIT
Considering the 90-day investment horizon Walmart is expected to generate 0.74 times more return on investment than 1ST SUMMIT. However, Walmart is 1.34 times less risky than 1ST SUMMIT. It trades about 0.03 of its potential returns per unit of risk. 1ST SUMMIT BANCORP is currently generating about -0.11 per unit of risk. If you would invest 9,168 in Walmart on November 27, 2024 and sell it today you would earn a total of 199.00 from holding Walmart or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. 1ST SUMMIT BANCORP
Performance |
| Timeline |
| Walmart |
| 1ST SUMMIT BANCORP |
Walmart and 1ST SUMMIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and 1ST SUMMIT
The main advantage of trading using opposite Walmart and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 1ST SUMMIT 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 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT's long position.| Walmart vs. Target | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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