Correlation Between Walmart and Pacer Developed
Can any of the company-specific risk be diversified away by investing in both Walmart and Pacer Developed 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 Pacer Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Pacer Developed Markets, you can compare the effects of market volatilities on Walmart and Pacer Developed 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 Pacer Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Pacer Developed.
Diversification Opportunities for Walmart and Pacer Developed
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Pacer is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Pacer Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Developed Markets 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 Pacer Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Developed Markets has no effect on the direction of Walmart i.e., Walmart and Pacer Developed go up and down completely randomly.
Pair Corralation between Walmart and Pacer Developed
Considering the 90-day investment horizon Walmart is expected to generate 1.24 times more return on investment than Pacer Developed. However, Walmart is 1.24 times more volatile than Pacer Developed Markets. It trades about 0.34 of its potential returns per unit of risk. Pacer Developed Markets is currently generating about -0.1 per unit of risk. If you would invest 8,275 in Walmart on August 28, 2024 and sell it today you would earn a total of 675.00 from holding Walmart or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Pacer Developed Markets
Performance |
| Timeline |
| Walmart |
| Pacer Developed Markets |
Walmart and Pacer Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Pacer Developed
The main advantage of trading using opposite Walmart and Pacer Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Pacer Developed 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 Pacer Developed will offset losses from the drop in Pacer Developed's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Pacer Developed vs. Dimensional Targeted Value | Pacer Developed vs. Dimensional Small Cap | Pacer Developed vs. Dimensional Marketwide Value | Pacer Developed vs. Dimensional Core Equity |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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