Correlation Between Walmart and NFI
Can any of the company-specific risk be diversified away by investing in both Walmart and NFI 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 NFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and NFI Group, you can compare the effects of market volatilities on Walmart and NFI 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 NFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and NFI.
Diversification Opportunities for Walmart and NFI
Pay attention - limited upside
The 3 months correlation between Walmart and NFI is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and NFI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NFI 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 NFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NFI Group has no effect on the direction of Walmart i.e., Walmart and NFI go up and down completely randomly.
Pair Corralation between Walmart and NFI
Considering the 90-day investment horizon Walmart is expected to generate 0.34 times more return on investment than NFI. However, Walmart is 2.91 times less risky than NFI. It trades about 0.12 of its potential returns per unit of risk. NFI Group is currently generating about 0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. NFI Group
Performance |
| Timeline |
| Walmart |
| NFI Group |
Walmart and NFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and NFI
The main advantage of trading using opposite Walmart and NFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, NFI 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 NFI will offset losses from the drop in NFI'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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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