Correlation Between Walmart and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both Walmart and Haleon Plc 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 Haleon Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Haleon plc, you can compare the effects of market volatilities on Walmart and Haleon Plc 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 Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Haleon Plc.
Diversification Opportunities for Walmart and Haleon Plc
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Haleon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc 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 Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Walmart i.e., Walmart and Haleon Plc go up and down completely randomly.
Pair Corralation between Walmart and Haleon Plc
Considering the 90-day investment horizon Walmart is expected to generate 29.09 times less return on investment than Haleon Plc. But when comparing it to its historical volatility, Walmart is 60.75 times less risky than Haleon Plc. It trades about 0.12 of its potential returns per unit of risk. Haleon plc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Haleon plc on August 24, 2024 and sell it today you would earn a total of 116.00 from holding Haleon plc or generate 34.22% 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. Haleon plc
Performance |
| Timeline |
| Walmart |
| Haleon plc |
Walmart and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Haleon Plc
The main advantage of trading using opposite Walmart and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Haleon Plc 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 Haleon Plc will offset losses from the drop in Haleon Plc'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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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