Correlation Between Walmart and Modern Mobility
Can any of the company-specific risk be diversified away by investing in both Walmart and Modern Mobility 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 Modern Mobility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Modern Mobility Aids, you can compare the effects of market volatilities on Walmart and Modern Mobility 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 Modern Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Modern Mobility.
Diversification Opportunities for Walmart and Modern Mobility
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Modern is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Modern Mobility Aids in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modern Mobility Aids 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 Modern Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modern Mobility Aids has no effect on the direction of Walmart i.e., Walmart and Modern Mobility go up and down completely randomly.
Pair Corralation between Walmart and Modern Mobility
Considering the 90-day investment horizon Walmart is expected to generate 17.14 times less return on investment than Modern Mobility. But when comparing it to its historical volatility, Walmart is 30.01 times less risky than Modern Mobility. It trades about 0.23 of its potential returns per unit of risk. Modern Mobility Aids is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.60 in Modern Mobility Aids on August 28, 2024 and sell it today you would earn a total of 0.30 from holding Modern Mobility Aids or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Walmart vs. Modern Mobility Aids
Performance |
| Timeline |
| Walmart |
| Modern Mobility Aids |
Walmart and Modern Mobility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Modern Mobility
The main advantage of trading using opposite Walmart and Modern Mobility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Modern Mobility 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 Modern Mobility will offset losses from the drop in Modern Mobility'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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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