Correlation Between Walmart and Monument Circle
Can any of the company-specific risk be diversified away by investing in both Walmart and Monument Circle 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 Monument Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Monument Circle Acquisition, you can compare the effects of market volatilities on Walmart and Monument Circle 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 Monument Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Monument Circle.
Diversification Opportunities for Walmart and Monument Circle
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Monument is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Monument Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Circle Acqu 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 Monument Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Circle Acqu has no effect on the direction of Walmart i.e., Walmart and Monument Circle go up and down completely randomly.
Pair Corralation between Walmart and Monument Circle
Considering the 90-day investment horizon Walmart is expected to generate 0.06 times more return on investment than Monument Circle. However, Walmart is 17.41 times less risky than Monument Circle. It trades about 0.12 of its potential returns per unit of risk. Monument Circle Acquisition is currently generating about -0.18 per unit of risk. If you would invest 4,913 in Walmart on August 24, 2024 and sell it today you would earn a total of 4,131 from holding Walmart or generate 84.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 6.05% |
| Values | Daily Returns |
Walmart vs. Monument Circle Acquisition
Performance |
| Timeline |
| Walmart |
| Monument Circle Acqu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Monument Circle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Monument Circle
The main advantage of trading using opposite Walmart and Monument Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Monument Circle 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 Monument Circle will offset losses from the drop in Monument Circle'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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