Correlation Between Walmart and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Walmart and Goldman Sachs 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 Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Goldman Sachs ActiveBeta, you can compare the effects of market volatilities on Walmart and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Goldman Sachs.
Diversification Opportunities for Walmart and Goldman Sachs
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Goldman is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Goldman Sachs ActiveBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ActiveBeta 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ActiveBeta has no effect on the direction of Walmart i.e., Walmart and Goldman Sachs go up and down completely randomly.
Pair Corralation between Walmart and Goldman Sachs
Considering the 90-day investment horizon Walmart is expected to generate 0.78 times more return on investment than Goldman Sachs. However, Walmart is 1.29 times less risky than Goldman Sachs. It trades about 0.27 of its potential returns per unit of risk. Goldman Sachs ActiveBeta is currently generating about 0.12 per unit of risk. If you would invest 7,642 in Walmart on August 29, 2024 and sell it today you would earn a total of 1,489 from holding Walmart or generate 19.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Goldman Sachs ActiveBeta
Performance |
| Timeline |
| Walmart |
| Goldman Sachs ActiveBeta |
Walmart and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Goldman Sachs
The main advantage of trading using opposite Walmart and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Goldman Sachs vs. Vanguard Mid Cap Index | Goldman Sachs vs. Vanguard Small Cap Value | Goldman Sachs vs. Vanguard FTSE Emerging | Goldman Sachs vs. Vanguard Large Cap Index |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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