Correlation Between Walmart and Shawcor
Can any of the company-specific risk be diversified away by investing in both Walmart and Shawcor 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 Shawcor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Shawcor, you can compare the effects of market volatilities on Walmart and Shawcor 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 Shawcor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Shawcor.
Diversification Opportunities for Walmart and Shawcor
Very poor diversification
The 3 months correlation between Walmart and Shawcor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Shawcor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shawcor 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 Shawcor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shawcor has no effect on the direction of Walmart i.e., Walmart and Shawcor go up and down completely randomly.
Pair Corralation between Walmart and Shawcor
Considering the 90-day investment horizon Walmart is expected to generate 3.88 times less return on investment than Shawcor. But when comparing it to its historical volatility, Walmart is 1.92 times less risky than Shawcor. It trades about 0.16 of its potential returns per unit of risk. Shawcor is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,285 in Shawcor on September 12, 2024 and sell it today you would earn a total of 228.00 from holding Shawcor or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 6.7% |
| Values | Daily Returns |
Walmart vs. Shawcor
Performance |
| Timeline |
| Walmart |
| Shawcor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Shawcor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Shawcor
The main advantage of trading using opposite Walmart and Shawcor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Shawcor 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 Shawcor will offset losses from the drop in Shawcor's 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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