Correlation Between Walmart and Sumitomo
Can any of the company-specific risk be diversified away by investing in both Walmart and Sumitomo 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 Sumitomo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Sumitomo, you can compare the effects of market volatilities on Walmart and Sumitomo 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 Sumitomo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Sumitomo.
Diversification Opportunities for Walmart and Sumitomo
Excellent diversification
The 3 months correlation between Walmart and Sumitomo is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Sumitomo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo 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 Sumitomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo has no effect on the direction of Walmart i.e., Walmart and Sumitomo go up and down completely randomly.
Pair Corralation between Walmart and Sumitomo
Considering the 90-day investment horizon Walmart is expected to generate 0.27 times more return on investment than Sumitomo. However, Walmart is 3.71 times less risky than Sumitomo. It trades about 0.13 of its potential returns per unit of risk. Sumitomo is currently generating about 0.04 per unit of risk. If you would invest 4,769 in Walmart on September 4, 2024 and sell it today you would earn a total of 4,495 from holding Walmart or generate 94.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 92.32% |
| Values | Daily Returns |
Walmart vs. Sumitomo
Performance |
| Timeline |
| Walmart |
| Sumitomo |
Walmart and Sumitomo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Sumitomo
The main advantage of trading using opposite Walmart and Sumitomo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Sumitomo 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 Sumitomo will offset losses from the drop in Sumitomo's long position.| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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