Correlation Between Walmart and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both Walmart and Plum Acquisition 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 Plum Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Plum Acquisition I, you can compare the effects of market volatilities on Walmart and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Plum Acquisition.
Diversification Opportunities for Walmart and Plum Acquisition
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Plum is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Plum Acquisition I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition I 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition I has no effect on the direction of Walmart i.e., Walmart and Plum Acquisition go up and down completely randomly.
Pair Corralation between Walmart and Plum Acquisition
Considering the 90-day investment horizon Walmart is expected to generate 0.31 times more return on investment than Plum Acquisition. However, Walmart is 3.24 times less risky than Plum Acquisition. It trades about 0.22 of its potential returns per unit of risk. Plum Acquisition I is currently generating about 0.0 per unit of risk. If you would invest 5,076 in Walmart on August 27, 2024 and sell it today you would earn a total of 3,968 from holding Walmart or generate 78.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.24% |
| Values | Daily Returns |
Walmart vs. Plum Acquisition I
Performance |
| Timeline |
| Walmart |
| Plum Acquisition I |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Walmart and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Plum Acquisition
The main advantage of trading using opposite Walmart and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Plum Acquisition 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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