Correlation Between Walmart and Mundus
Can any of the company-specific risk be diversified away by investing in both Walmart and Mundus 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 Mundus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Mundus Group, you can compare the effects of market volatilities on Walmart and Mundus 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 Mundus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Mundus.
Diversification Opportunities for Walmart and Mundus
Very good diversification
The 3 months correlation between Walmart and Mundus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Mundus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundus Group 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 Mundus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundus Group has no effect on the direction of Walmart i.e., Walmart and Mundus go up and down completely randomly.
Pair Corralation between Walmart and Mundus
Considering the 90-day investment horizon Walmart is expected to generate 3.68 times less return on investment than Mundus. But when comparing it to its historical volatility, Walmart is 12.11 times less risky than Mundus. It trades about 0.15 of its potential returns per unit of risk. Mundus Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.14 in Mundus Group on September 2, 2024 and sell it today you would lose (0.06) from holding Mundus Group or give up 42.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Walmart vs. Mundus Group
Performance |
| Timeline |
| Walmart |
| Mundus Group |
Walmart and Mundus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Mundus
The main advantage of trading using opposite Walmart and Mundus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Mundus 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 Mundus will offset losses from the drop in Mundus' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Mundus vs. Atlas Technology Grp | Mundus vs. TransAKT | Mundus vs. China Health Management | Mundus vs. American Leisure 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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