Correlation Between Walmart and Green Thumb
Can any of the company-specific risk be diversified away by investing in both Walmart and Green Thumb 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 Green Thumb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Green Thumb Industries, you can compare the effects of market volatilities on Walmart and Green Thumb 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 Green Thumb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Green Thumb.
Diversification Opportunities for Walmart and Green Thumb
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Green is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Green Thumb Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Thumb Industries 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 Green Thumb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Thumb Industries has no effect on the direction of Walmart i.e., Walmart and Green Thumb go up and down completely randomly.
Pair Corralation between Walmart and Green Thumb
Considering the 90-day investment horizon Walmart is expected to generate 0.26 times more return on investment than Green Thumb. However, Walmart is 3.91 times less risky than Green Thumb. It trades about 0.12 of its potential returns per unit of risk. Green Thumb Industries is currently generating about 0.0 per unit of risk. If you would invest 4,913 in Walmart on August 24, 2024 and sell it today you would earn a total of 4,131 from holding Walmart or generate 84.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Green Thumb Industries
Performance |
| Timeline |
| Walmart |
| Green Thumb Industries |
Walmart and Green Thumb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Green Thumb
The main advantage of trading using opposite Walmart and Green Thumb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Green Thumb 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 Green Thumb will offset losses from the drop in Green Thumb's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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