Correlation Between Walmart and Exchange Traded
Can any of the company-specific risk be diversified away by investing in both Walmart and Exchange Traded 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 Exchange Traded into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Exchange Traded Concepts, you can compare the effects of market volatilities on Walmart and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Exchange Traded.
Diversification Opportunities for Walmart and Exchange Traded
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Exchange is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts 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 Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Walmart i.e., Walmart and Exchange Traded go up and down completely randomly.
Pair Corralation between Walmart and Exchange Traded
Considering the 90-day investment horizon Walmart is expected to generate 1.0 times more return on investment than Exchange Traded. However, Walmart is 1.0 times more volatile than Exchange Traded Concepts. It trades about 0.12 of its potential returns per unit of risk. Exchange Traded Concepts is currently generating about 0.06 per unit of risk. If you would invest 4,856 in Walmart on August 27, 2024 and sell it today you would earn a total of 4,188 from holding Walmart or generate 86.24% 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. Exchange Traded Concepts
Performance |
| Timeline |
| Walmart |
| Exchange Traded Concepts |
Walmart and Exchange Traded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Exchange Traded
The main advantage of trading using opposite Walmart and Exchange Traded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Exchange Traded 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 Exchange Traded will offset losses from the drop in Exchange Traded's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
| Exchange Traded vs. VanEck India Growth | Exchange Traded vs. Franklin FTSE India | Exchange Traded vs. Columbia India Consumer | Exchange Traded vs. First Trust India |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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