Correlation Between Walmart and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Walmart and Investment Grade 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 Investment Grade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Investment Grade Porate, you can compare the effects of market volatilities on Walmart and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Investment Grade.
Diversification Opportunities for Walmart and Investment Grade
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Investment is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of Walmart i.e., Walmart and Investment Grade go up and down completely randomly.
Pair Corralation between Walmart and Investment Grade
Considering the 90-day investment horizon Walmart is expected to generate 2.76 times more return on investment than Investment Grade. However, Walmart is 2.76 times more volatile than Investment Grade Porate. It trades about 0.34 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.07 per unit of risk. If you would invest 8,275 in Walmart on August 28, 2024 and sell it today you would earn a total of 675.00 from holding Walmart or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Investment Grade Porate
Performance |
| Timeline |
| Walmart |
| Investment Grade Porate |
Walmart and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Investment Grade
The main advantage of trading using opposite Walmart and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
| Investment Grade vs. Transamerica Emerging Markets | Investment Grade vs. Nasdaq 100 2x Strategy | Investment Grade vs. Siit Emerging Markets | Investment Grade vs. Investec Emerging Markets |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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