Correlation Between Walmart and MicroSectorsTM Oil
Can any of the company-specific risk be diversified away by investing in both Walmart and MicroSectorsTM Oil 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 MicroSectorsTM Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and MicroSectorsTM Oil Gas, you can compare the effects of market volatilities on Walmart and MicroSectorsTM Oil 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 MicroSectorsTM Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and MicroSectorsTM Oil.
Diversification Opportunities for Walmart and MicroSectorsTM Oil
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and MicroSectorsTM is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and MicroSectorsTM Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectorsTM Oil Gas 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 MicroSectorsTM Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectorsTM Oil Gas has no effect on the direction of Walmart i.e., Walmart and MicroSectorsTM Oil go up and down completely randomly.
Pair Corralation between Walmart and MicroSectorsTM Oil
Considering the 90-day investment horizon Walmart is expected to generate 0.26 times more return on investment than MicroSectorsTM Oil. However, Walmart is 3.82 times less risky than MicroSectorsTM Oil. It trades about 0.13 of its potential returns per unit of risk. MicroSectorsTM Oil Gas is currently generating about -0.02 per unit of risk. If you would invest 4,725 in Walmart on August 30, 2024 and sell it today you would earn a total of 4,463 from holding Walmart or generate 94.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. MicroSectorsTM Oil Gas
Performance |
| Timeline |
| Walmart |
| MicroSectorsTM Oil Gas |
Walmart and MicroSectorsTM Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and MicroSectorsTM Oil
The main advantage of trading using opposite Walmart and MicroSectorsTM Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, MicroSectorsTM Oil 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 MicroSectorsTM Oil will offset losses from the drop in MicroSectorsTM Oil's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. Direxion Daily SP | MicroSectorsTM Oil vs. MicroSectors FANG Index |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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