Correlation Between Walmart and LZG International
Can any of the company-specific risk be diversified away by investing in both Walmart and LZG International 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 LZG International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and LZG International, you can compare the effects of market volatilities on Walmart and LZG International 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 LZG International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and LZG International.
Diversification Opportunities for Walmart and LZG International
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and LZG is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and LZG International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LZG International 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 LZG International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LZG International has no effect on the direction of Walmart i.e., Walmart and LZG International go up and down completely randomly.
Pair Corralation between Walmart and LZG International
Considering the 90-day investment horizon Walmart is expected to generate 0.06 times more return on investment than LZG International. However, Walmart is 17.5 times less risky than LZG International. It trades about 0.29 of its potential returns per unit of risk. LZG International is currently generating about -0.04 per unit of risk. If you would invest 8,075 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,113 from holding Walmart or generate 13.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Walmart vs. LZG International
Performance |
| Timeline |
| Walmart |
| LZG International |
Walmart and LZG International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and LZG International
The main advantage of trading using opposite Walmart and LZG International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, LZG International 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 LZG International will offset losses from the drop in LZG International's long position.| Walmart vs. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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