Correlation Between Walmart and OShares Small
Can any of the company-specific risk be diversified away by investing in both Walmart and OShares Small 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 OShares Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and OShares Small Cap Quality, you can compare the effects of market volatilities on Walmart and OShares Small 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 OShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and OShares Small.
Diversification Opportunities for Walmart and OShares Small
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and OShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and OShares Small Cap Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OShares Small Cap 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 OShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OShares Small Cap has no effect on the direction of Walmart i.e., Walmart and OShares Small go up and down completely randomly.
Pair Corralation between Walmart and OShares Small
Considering the 90-day investment horizon Walmart is expected to generate 1.23 times more return on investment than OShares Small. However, Walmart is 1.23 times more volatile than OShares Small Cap Quality. It trades about 0.22 of its potential returns per unit of risk. OShares Small Cap Quality is currently generating about 0.11 per unit of risk. If you would invest 5,455 in Walmart on August 28, 2024 and sell it today you would earn a total of 3,495 from holding Walmart or generate 64.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. OShares Small Cap Quality
Performance |
| Timeline |
| Walmart |
| OShares Small Cap |
Walmart and OShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and OShares Small
The main advantage of trading using opposite Walmart and OShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, OShares Small 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 OShares Small will offset losses from the drop in OShares Small's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| OShares Small vs. OShares Quality Dividend | OShares Small vs. OShares Europe Quality | OShares Small vs. OShares Global Internet | OShares Small vs. ProShares SP MidCap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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