Correlation Between Walmart and Real Brands
Can any of the company-specific risk be diversified away by investing in both Walmart and Real Brands 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 Real Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Real Brands, you can compare the effects of market volatilities on Walmart and Real Brands 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 Real Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Real Brands.
Diversification Opportunities for Walmart and Real Brands
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Real is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Real Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Brands 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 Real Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Brands has no effect on the direction of Walmart i.e., Walmart and Real Brands go up and down completely randomly.
Pair Corralation between Walmart and Real Brands
Considering the 90-day investment horizon Walmart is expected to generate 0.03 times more return on investment than Real Brands. However, Walmart is 30.29 times less risky than Real Brands. It trades about 0.28 of its potential returns per unit of risk. Real Brands is currently generating about -0.03 per unit of risk. If you would invest 8,075 in Walmart on August 29, 2024 and sell it today you would earn a total of 1,056 from holding Walmart or generate 13.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Walmart vs. Real Brands
Performance |
| Timeline |
| Walmart |
| Real Brands |
Walmart and Real Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Real Brands
The main advantage of trading using opposite Walmart and Real Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Real Brands 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 Real Brands will offset losses from the drop in Real Brands' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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