Correlation Between Walmart and Ceconomy
Can any of the company-specific risk be diversified away by investing in both Walmart and Ceconomy 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 Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Ceconomy AG ADR, you can compare the effects of market volatilities on Walmart and Ceconomy 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 Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Ceconomy.
Diversification Opportunities for Walmart and Ceconomy
Good diversification
The 3 months correlation between Walmart and Ceconomy is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR 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 Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Walmart i.e., Walmart and Ceconomy go up and down completely randomly.
Pair Corralation between Walmart and Ceconomy
Considering the 90-day investment horizon Walmart is expected to generate 0.23 times more return on investment than Ceconomy. However, Walmart is 4.26 times less risky than Ceconomy. It trades about 0.16 of its potential returns per unit of risk. Ceconomy AG ADR is currently generating about -0.01 per unit of risk. If you would invest 9,035 in Walmart on October 23, 2024 and sell it today you would earn a total of 273.00 from holding Walmart or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Walmart vs. Ceconomy AG ADR
Performance |
| Timeline |
| Walmart |
| Ceconomy AG ADR |
Walmart and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Ceconomy
The main advantage of trading using opposite Walmart and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
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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