Correlation Between Walmart and Information Services
Can any of the company-specific risk be diversified away by investing in both Walmart and Information Services 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 Information Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Information Services, you can compare the effects of market volatilities on Walmart and Information Services 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 Information Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Information Services.
Diversification Opportunities for Walmart and Information Services
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Information is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Walmart i.e., Walmart and Information Services go up and down completely randomly.
Pair Corralation between Walmart and Information Services
Considering the 90-day investment horizon Walmart is expected to generate 0.47 times more return on investment than Information Services. However, Walmart is 2.14 times less risky than Information Services. It trades about 0.14 of its potential returns per unit of risk. Information Services is currently generating about 0.04 per unit of risk. If you would invest 4,665 in Walmart on September 12, 2024 and sell it today you would earn a total of 4,790 from holding Walmart or generate 102.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 65.66% |
| Values | Daily Returns |
Walmart vs. Information Services
Performance |
| Timeline |
| Walmart |
| Information Services |
Walmart and Information Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Information Services
The main advantage of trading using opposite Walmart and Information Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Information Services 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 Information Services will offset losses from the drop in Information Services' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Information Services vs. Figs Inc | Information Services vs. Skechers USA | Information Services vs. Atmos Energy | Information Services vs. GE Vernova LLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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