Correlation Between Walmart and National Western
Can any of the company-specific risk be diversified away by investing in both Walmart and National Western 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 National Western into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and National Western Life, you can compare the effects of market volatilities on Walmart and National Western 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 National Western. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and National Western.
Diversification Opportunities for Walmart and National Western
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and National is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and National Western Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Western Life 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 National Western. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Western Life has no effect on the direction of Walmart i.e., Walmart and National Western go up and down completely randomly.
Pair Corralation between Walmart and National Western
Considering the 90-day investment horizon Walmart is expected to generate 5.97 times more return on investment than National Western. However, Walmart is 5.97 times more volatile than National Western Life. It trades about 0.23 of its potential returns per unit of risk. National Western Life is currently generating about 0.41 per unit of risk. If you would invest 6,471 in Walmart on August 28, 2024 and sell it today you would earn a total of 2,479 from holding Walmart or generate 38.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 21.43% |
| Values | Daily Returns |
Walmart vs. National Western Life
Performance |
| Timeline |
| Walmart |
| National Western Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and National Western Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and National Western
The main advantage of trading using opposite Walmart and National Western positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, National Western 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 National Western will offset losses from the drop in National Western's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| National Western vs. MetLife Preferred Stock | National Western vs. Prudential Public Limited | National Western vs. CNO Financial Group | National Western vs. FG Annuities Life |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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