Correlation Between Walmart and FlexShares Ready
Can any of the company-specific risk be diversified away by investing in both Walmart and FlexShares Ready 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 FlexShares Ready into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and FlexShares Ready Access, you can compare the effects of market volatilities on Walmart and FlexShares Ready 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 FlexShares Ready. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and FlexShares Ready.
Diversification Opportunities for Walmart and FlexShares Ready
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and FlexShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FlexShares Ready Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Ready Access 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 FlexShares Ready. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Ready Access has no effect on the direction of Walmart i.e., Walmart and FlexShares Ready go up and down completely randomly.
Pair Corralation between Walmart and FlexShares Ready
Considering the 90-day investment horizon Walmart is expected to generate 39.31 times more return on investment than FlexShares Ready. However, Walmart is 39.31 times more volatile than FlexShares Ready Access. It trades about 0.16 of its potential returns per unit of risk. FlexShares Ready Access is currently generating about 0.81 per unit of risk. If you would invest 4,987 in Walmart on August 31, 2024 and sell it today you would earn a total of 4,263 from holding Walmart or generate 85.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. FlexShares Ready Access
Performance |
| Timeline |
| Walmart |
| FlexShares Ready Access |
Walmart and FlexShares Ready Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and FlexShares Ready
The main advantage of trading using opposite Walmart and FlexShares Ready positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, FlexShares Ready 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 FlexShares Ready will offset losses from the drop in FlexShares Ready's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| FlexShares Ready vs. SPDR SSgA Ultra | FlexShares Ready vs. FlexShares iBoxx 3 Year | FlexShares Ready vs. FlexShares iBoxx 5 Year | FlexShares Ready vs. PIMCO Enhanced Low |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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