Correlation Between Walmart and Ingles Markets
Can any of the company-specific risk be diversified away by investing in both Walmart and Ingles Markets 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 Ingles Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Ingles Markets Incorporated, you can compare the effects of market volatilities on Walmart and Ingles Markets 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 Ingles Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Ingles Markets.
Diversification Opportunities for Walmart and Ingles Markets
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Walmart and Ingles is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ingles Markets Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingles 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 Ingles Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingles Markets has no effect on the direction of Walmart i.e., Walmart and Ingles Markets go up and down completely randomly.
Pair Corralation between Walmart and Ingles Markets
Considering the 90-day investment horizon Walmart is expected to generate 1.05 times less return on investment than Ingles Markets. But when comparing it to its historical volatility, Walmart is 1.81 times less risky than Ingles Markets. It trades about 0.53 of its potential returns per unit of risk. Ingles Markets Incorporated is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 6,569 in Ingles Markets Incorporated on September 3, 2024 and sell it today you would earn a total of 821.00 from holding Ingles Markets Incorporated or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Ingles Markets Incorporated
Performance |
| Timeline |
| Walmart |
| Ingles Markets |
Walmart and Ingles Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Ingles Markets
The main advantage of trading using opposite Walmart and Ingles Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Ingles Markets 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 Ingles Markets will offset losses from the drop in Ingles Markets' long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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