Correlation Between Walmart and Newegg Commerce
Can any of the company-specific risk be diversified away by investing in both Walmart and Newegg Commerce 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 Newegg Commerce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Newegg Commerce, you can compare the effects of market volatilities on Walmart and Newegg Commerce 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 Newegg Commerce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Newegg Commerce.
Diversification Opportunities for Walmart and Newegg Commerce
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Newegg is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Newegg Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newegg Commerce 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 Newegg Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newegg Commerce has no effect on the direction of Walmart i.e., Walmart and Newegg Commerce go up and down completely randomly.
Pair Corralation between Walmart and Newegg Commerce
Considering the 90-day investment horizon Walmart is expected to generate 0.28 times more return on investment than Newegg Commerce. However, Walmart is 3.53 times less risky than Newegg Commerce. It trades about 0.49 of its potential returns per unit of risk. Newegg Commerce is currently generating about -0.04 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Newegg Commerce
Performance |
| Timeline |
| Walmart |
| Newegg Commerce |
Walmart and Newegg Commerce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Newegg Commerce
The main advantage of trading using opposite Walmart and Newegg Commerce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Newegg Commerce 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 Newegg Commerce will offset losses from the drop in Newegg Commerce's long position.| Walmart vs. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Village Super Market |
| Newegg Commerce vs. Jeffs Brands | Newegg Commerce vs. Jumia Technologies AG | Newegg Commerce vs. Kidpik Corp | Newegg Commerce vs. Qurate Retail Series |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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