Correlation Between Walmart and Innovative Food
Can any of the company-specific risk be diversified away by investing in both Walmart and Innovative Food 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 Innovative Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Innovative Food Hldg, you can compare the effects of market volatilities on Walmart and Innovative Food 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 Innovative Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Innovative Food.
Diversification Opportunities for Walmart and Innovative Food
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Innovative is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Innovative Food Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Food Hldg 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 Innovative Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Food Hldg has no effect on the direction of Walmart i.e., Walmart and Innovative Food go up and down completely randomly.
Pair Corralation between Walmart and Innovative Food
Considering the 90-day investment horizon Walmart is expected to generate 0.29 times more return on investment than Innovative Food. However, Walmart is 3.4 times less risky than Innovative Food. It trades about 0.53 of its potential returns per unit of risk. Innovative Food Hldg is currently generating about -0.04 per unit of risk. If you would invest 8,139 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,049 from holding Walmart or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Innovative Food Hldg
Performance |
| Timeline |
| Walmart |
| Innovative Food Hldg |
Walmart and Innovative Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Innovative Food
The main advantage of trading using opposite Walmart and Innovative Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Innovative Food 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 Innovative Food will offset losses from the drop in Innovative Food's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Innovative Food vs. Organto Foods | Innovative Food vs. Colabor Group | Innovative Food vs. Bunzl plc | Innovative Food vs. Hf Foods Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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