Correlation Between Walmart and Payden Emerging
Can any of the company-specific risk be diversified away by investing in both Walmart and Payden Emerging 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 Payden Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Payden Emerging Markets, you can compare the effects of market volatilities on Walmart and Payden Emerging 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 Payden Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Payden Emerging.
Diversification Opportunities for Walmart and Payden Emerging
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Payden is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Payden Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Emerging Markets 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 Payden Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Emerging Markets has no effect on the direction of Walmart i.e., Walmart and Payden Emerging go up and down completely randomly.
Pair Corralation between Walmart and Payden Emerging
Considering the 90-day investment horizon Walmart is expected to generate 2.24 times more return on investment than Payden Emerging. However, Walmart is 2.24 times more volatile than Payden Emerging Markets. It trades about 0.39 of its potential returns per unit of risk. Payden Emerging Markets is currently generating about -0.09 per unit of risk. If you would invest 8,275 in Walmart on August 29, 2024 and sell it today you would earn a total of 856.00 from holding Walmart or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Payden Emerging Markets
Performance |
| Timeline |
| Walmart |
| Payden Emerging Markets |
Walmart and Payden Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Payden Emerging
The main advantage of trading using opposite Walmart and Payden Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Payden Emerging 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 Payden Emerging will offset losses from the drop in Payden Emerging's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Payden Emerging vs. Fidelity Managed Retirement | Payden Emerging vs. Target Retirement 2040 | Payden Emerging vs. Blackrock Moderate Prepared | Payden Emerging vs. Wisdomtree Siegel Moderate |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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