Correlation Between Walmart and Northern International
Can any of the company-specific risk be diversified away by investing in both Walmart and Northern International 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 International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Northern International Equity, you can compare the effects of market volatilities on Walmart and Northern International 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 International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Northern International.
Diversification Opportunities for Walmart and Northern International
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and NORTHERN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Northern International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern International has no effect on the direction of Walmart i.e., Walmart and Northern International go up and down completely randomly.
Pair Corralation between Walmart and Northern International
Considering the 90-day investment horizon Walmart is expected to generate 1.51 times more return on investment than Northern International. However, Walmart is 1.51 times more volatile than Northern International Equity. It trades about 0.39 of its potential returns per unit of risk. Northern International Equity is currently generating about -0.14 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Northern International Equity
Performance |
| Timeline |
| Walmart |
| Northern International |
Walmart and Northern International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Northern International
The main advantage of trading using opposite Walmart and Northern International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Northern International 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 International will offset losses from the drop in Northern International'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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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