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 MarketBeta, 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
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Goldman is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Goldman Sachs MarketBeta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs MarketBeta 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 MarketBeta 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 1.2 times more return on investment than Goldman Sachs. However, Walmart is 1.2 times more volatile than Goldman Sachs MarketBeta. It trades about 0.49 of its potential returns per unit of risk. Goldman Sachs MarketBeta is currently generating about 0.18 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% 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 MarketBeta
Performance |
| Timeline |
| Walmart |
| Goldman Sachs MarketBeta |
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. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Village Super Market |
| Goldman Sachs vs. Goldman Sachs ETF | Goldman Sachs vs. Goldman Sachs MarketBeta | Goldman Sachs vs. Goldman Sachs ActiveBeta | Goldman Sachs vs. Goldman Sachs MarketBeta |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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