Correlation Between Walmart and Heineken
Can any of the company-specific risk be diversified away by investing in both Walmart and Heineken 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 Heineken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Heineken NV, you can compare the effects of market volatilities on Walmart and Heineken 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 Heineken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Heineken.
Diversification Opportunities for Walmart and Heineken
Pay attention - limited upside
The 3 months correlation between Walmart and Heineken is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Heineken NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken NV 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 Heineken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken NV has no effect on the direction of Walmart i.e., Walmart and Heineken go up and down completely randomly.
Pair Corralation between Walmart and Heineken
Considering the 90-day investment horizon Walmart is expected to generate 0.87 times more return on investment than Heineken. However, Walmart is 1.15 times less risky than Heineken. It trades about 0.26 of its potential returns per unit of risk. Heineken NV is currently generating about -0.24 per unit of risk. If you would invest 7,723 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,465 from holding Walmart or generate 18.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Heineken NV
Performance |
| Timeline |
| Walmart |
| Heineken NV |
Walmart and Heineken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Heineken
The main advantage of trading using opposite Walmart and Heineken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Heineken 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 Heineken will offset losses from the drop in Heineken's long position.| Walmart vs. Target | Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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