Correlation Between Walmart and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares Consumer 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 Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and iShares Consumer Discretionary, you can compare the effects of market volatilities on Walmart and IShares Consumer 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 Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares Consumer.
Diversification Opportunities for Walmart and IShares Consumer
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares Consumer Discretionary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Dis 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 Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Dis has no effect on the direction of Walmart i.e., Walmart and IShares Consumer go up and down completely randomly.
Pair Corralation between Walmart and IShares Consumer
Considering the 90-day investment horizon Walmart is expected to generate 1.17 times more return on investment than IShares Consumer. However, Walmart is 1.17 times more volatile than iShares Consumer Discretionary. It trades about 0.49 of its potential returns per unit of risk. iShares Consumer Discretionary is currently generating about 0.45 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. iShares Consumer Discretionary
Performance |
| Timeline |
| Walmart |
| iShares Consumer Dis |
Walmart and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares Consumer
The main advantage of trading using opposite Walmart and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares Consumer 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 Consumer will offset losses from the drop in IShares Consumer's long position.| Walmart vs. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding |
| IShares Consumer vs. iShares Consumer Staples | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Basic Materials | IShares Consumer vs. iShares Utilities ETF |
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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