Correlation Between Walmart and Innovator Hedged
Can any of the company-specific risk be diversified away by investing in both Walmart and Innovator Hedged 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 Innovator Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Innovator Hedged Nasdaq 100, you can compare the effects of market volatilities on Walmart and Innovator Hedged 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 Innovator Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Innovator Hedged.
Diversification Opportunities for Walmart and Innovator Hedged
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Innovator is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Innovator Hedged Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Hedged Nasdaq 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 Innovator Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Hedged Nasdaq has no effect on the direction of Walmart i.e., Walmart and Innovator Hedged go up and down completely randomly.
Pair Corralation between Walmart and Innovator Hedged
Considering the 90-day investment horizon Walmart is expected to generate 1.47 times more return on investment than Innovator Hedged. However, Walmart is 1.47 times more volatile than Innovator Hedged Nasdaq 100. It trades about 0.13 of its potential returns per unit of risk. Innovator Hedged Nasdaq 100 is currently generating about 0.11 per unit of risk. If you would invest 4,796 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,454 from holding Walmart or generate 92.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 14.75% |
| Values | Daily Returns |
Walmart vs. Innovator Hedged Nasdaq 100
Performance |
| Timeline |
| Walmart |
| Innovator Hedged Nasdaq |
Walmart and Innovator Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Innovator Hedged
The main advantage of trading using opposite Walmart and Innovator Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Innovator Hedged 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 Innovator Hedged will offset losses from the drop in Innovator Hedged's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| Innovator Hedged vs. Core Alternative ETF | Innovator Hedged vs. Aptus Drawdown Managed | Innovator Hedged vs. Amplify BlackSwan Growth | Innovator Hedged vs. Invesco SP 500 |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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