Correlation Between Walmart and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares Russell 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 Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and iShares Russell Mid Cap, you can compare the effects of market volatilities on Walmart and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares Russell.
Diversification Opportunities for Walmart and IShares Russell
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Mid 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 Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Mid has no effect on the direction of Walmart i.e., Walmart and IShares Russell go up and down completely randomly.
Pair Corralation between Walmart and IShares Russell
Considering the 90-day investment horizon Walmart is expected to generate 1.16 times more return on investment than IShares Russell. However, Walmart is 1.16 times more volatile than iShares Russell Mid Cap. It trades about 0.28 of its potential returns per unit of risk. iShares Russell Mid Cap is currently generating about 0.23 per unit of risk. If you would invest 8,327 in Walmart on August 24, 2024 and sell it today you would earn a total of 512.00 from holding Walmart or generate 6.15% 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 Russell Mid Cap
Performance |
| Timeline |
| Walmart |
| iShares Russell Mid |
Walmart and IShares Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares Russell
The main advantage of trading using opposite Walmart and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| IShares Russell vs. First Trust Small | IShares Russell vs. First Trust Mid | IShares Russell vs. First Trust Small | IShares Russell vs. First Trust Large |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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