Correlation Between Walmart and 3M
Can any of the company-specific risk be diversified away by investing in both Walmart and 3M 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 3M into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and 3M Company, you can compare the effects of market volatilities on Walmart and 3M 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 3M. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 3M.
Diversification Opportunities for Walmart and 3M
Very good diversification
The 3 months correlation between Walmart and 3M is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and 3M Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3M Company 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 3M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3M Company has no effect on the direction of Walmart i.e., Walmart and 3M go up and down completely randomly.
Pair Corralation between Walmart and 3M
Considering the 90-day investment horizon Walmart is expected to generate 0.76 times more return on investment than 3M. However, Walmart is 1.31 times less risky than 3M. It trades about 0.27 of its potential returns per unit of risk. 3M Company is currently generating about 0.04 per unit of risk. If you would invest 7,717 in Walmart on September 3, 2024 and sell it today you would earn a total of 1,533 from holding Walmart or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. 3M Company
Performance |
| Timeline |
| Walmart |
| 3M Company |
Walmart and 3M Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and 3M
The main advantage of trading using opposite Walmart and 3M positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 3M 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 3M will offset losses from the drop in 3M's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| 3M vs. MDU Resources Group | 3M vs. Valmont Industries | 3M vs. Griffon | 3M vs. Compass Diversified Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |