Correlation Between Walmart and Northern Global
Can any of the company-specific risk be diversified away by investing in both Walmart and Northern Global 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 Northern Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Northern Global Real, you can compare the effects of market volatilities on Walmart and Northern Global 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 Northern Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Northern Global.
Diversification Opportunities for Walmart and Northern Global
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Northern is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Northern Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Global Real 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 Northern Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Global Real has no effect on the direction of Walmart i.e., Walmart and Northern Global go up and down completely randomly.
Pair Corralation between Walmart and Northern Global
Considering the 90-day investment horizon Walmart is expected to generate 1.42 times more return on investment than Northern Global. However, Walmart is 1.42 times more volatile than Northern Global Real. It trades about 0.39 of its potential returns per unit of risk. Northern Global Real is currently generating about 0.0 per unit of risk. If you would invest 8,275 in Walmart on August 29, 2024 and sell it today you would earn a total of 856.00 from holding Walmart or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Northern Global Real
Performance |
| Timeline |
| Walmart |
| Northern Global Real |
Walmart and Northern Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Northern Global
The main advantage of trading using opposite Walmart and Northern Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Northern Global 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 Northern Global will offset losses from the drop in Northern Global'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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