Correlation Between Walmart and Stone Ridge
Can any of the company-specific risk be diversified away by investing in both Walmart and Stone Ridge 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 Stone Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Stone Ridge 2060, you can compare the effects of market volatilities on Walmart and Stone Ridge 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 Stone Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Stone Ridge.
Diversification Opportunities for Walmart and Stone Ridge
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Stone is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Stone Ridge 2060 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Ridge 2060 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 Stone Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Ridge 2060 has no effect on the direction of Walmart i.e., Walmart and Stone Ridge go up and down completely randomly.
Pair Corralation between Walmart and Stone Ridge
Considering the 90-day investment horizon Walmart is expected to generate 3.55 times more return on investment than Stone Ridge. However, Walmart is 3.55 times more volatile than Stone Ridge 2060. It trades about 0.07 of its potential returns per unit of risk. Stone Ridge 2060 is currently generating about -0.06 per unit of risk. If you would invest 8,720 in Walmart on January 10, 2025 and sell it today you would earn a total of 338.00 from holding Walmart or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. Stone Ridge 2060
Performance |
| Timeline |
| Walmart |
| Stone Ridge 2060 |
Walmart and Stone Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Stone Ridge
The main advantage of trading using opposite Walmart and Stone Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Stone Ridge 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 Stone Ridge will offset losses from the drop in Stone Ridge's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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