Correlation Between Walmart and Leafly Holdings
Can any of the company-specific risk be diversified away by investing in both Walmart and Leafly Holdings 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 Leafly Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Leafly Holdings, you can compare the effects of market volatilities on Walmart and Leafly Holdings 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 Leafly Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Leafly Holdings.
Diversification Opportunities for Walmart and Leafly Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Leafly is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Leafly Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leafly Holdings 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 Leafly Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leafly Holdings has no effect on the direction of Walmart i.e., Walmart and Leafly Holdings go up and down completely randomly.
Pair Corralation between Walmart and Leafly Holdings
Considering the 90-day investment horizon Walmart is expected to generate 0.1 times more return on investment than Leafly Holdings. However, Walmart is 10.0 times less risky than Leafly Holdings. It trades about 0.28 of its potential returns per unit of risk. Leafly Holdings is currently generating about -0.18 per unit of risk. If you would invest 8,201 in Walmart on November 1, 2024 and sell it today you would earn a total of 1,663 from holding Walmart or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 88.33% |
| Values | Daily Returns |
Walmart vs. Leafly Holdings
Performance |
| Timeline |
| Walmart |
| Leafly Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Leafly Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Leafly Holdings
The main advantage of trading using opposite Walmart and Leafly Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Leafly Holdings 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 Leafly Holdings will offset losses from the drop in Leafly Holdings' long position.The idea behind Walmart and Leafly Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Leafly Holdings vs. Kiaro Holdings Corp | Leafly Holdings vs. Allstar Health Brands | Leafly Holdings vs. China Jo Jo Drugstores |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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