Correlation Between Walmart and IShares Micro
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares Micro 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 IShares Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and iShares Micro Cap ETF, you can compare the effects of market volatilities on Walmart and IShares Micro 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 IShares Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares Micro.
Diversification Opportunities for Walmart and IShares Micro
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and IShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares Micro Cap ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Micro Cap 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 IShares Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Micro Cap has no effect on the direction of Walmart i.e., Walmart and IShares Micro go up and down completely randomly.
Pair Corralation between Walmart and IShares Micro
Considering the 90-day investment horizon Walmart is expected to generate 0.74 times more return on investment than IShares Micro. However, Walmart is 1.36 times less risky than IShares Micro. It trades about 0.13 of its potential returns per unit of risk. iShares Micro Cap ETF is currently generating about 0.04 per unit of risk. If you would invest 4,813 in Walmart on August 31, 2024 and sell it today you would earn a total of 4,375 from holding Walmart or generate 90.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. iShares Micro Cap ETF
Performance |
| Timeline |
| Walmart |
| iShares Micro Cap |
Walmart and IShares Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares Micro
The main advantage of trading using opposite Walmart and IShares Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares Micro 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 IShares Micro will offset losses from the drop in IShares Micro's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| IShares Micro vs. iShares SP Small Cap | IShares Micro vs. iShares SP Small Cap | IShares Micro vs. iShares SP Mid Cap | IShares Micro vs. iShares Russell 1000 |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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