Correlation Between Walmart and Man Wah
Can any of the company-specific risk be diversified away by investing in both Walmart and Man Wah 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 Man Wah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Man Wah Holdings, you can compare the effects of market volatilities on Walmart and Man Wah 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 Man Wah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Man Wah.
Diversification Opportunities for Walmart and Man Wah
Poor diversification
The 3 months correlation between Walmart and Man is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Man Wah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Wah 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 Man Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Wah Holdings has no effect on the direction of Walmart i.e., Walmart and Man Wah go up and down completely randomly.
Pair Corralation between Walmart and Man Wah
Considering the 90-day investment horizon Walmart is expected to generate 0.2 times more return on investment than Man Wah. However, Walmart is 4.89 times less risky than Man Wah. It trades about 0.16 of its potential returns per unit of risk. Man Wah Holdings is currently generating about 0.0 per unit of risk. If you would invest 4,909 in Walmart on August 27, 2024 and sell it today you would earn a total of 4,135 from holding Walmart or generate 84.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 77.75% |
| Values | Daily Returns |
Walmart vs. Man Wah Holdings
Performance |
| Timeline |
| Walmart |
| Man Wah Holdings |
Walmart and Man Wah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Man Wah
The main advantage of trading using opposite Walmart and Man Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Man Wah 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 Man Wah will offset losses from the drop in Man Wah's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
| Man Wah vs. La Z Boy Incorporated | Man Wah vs. MasterBrand | Man Wah vs. MillerKnoll | Man Wah vs. Flexsteel Industries |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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