Correlation Between Walmart and IShares
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares 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 IShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and IShares, you can compare the effects of market volatilities on Walmart and IShares 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 IShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares.
Diversification Opportunities for Walmart and IShares
Very poor diversification
The 3 months correlation between Walmart and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Walmart i.e., Walmart and IShares go up and down completely randomly.
Pair Corralation between Walmart and IShares
Considering the 90-day investment horizon Walmart is expected to generate 1.16 times more return on investment than IShares. However, Walmart is 1.16 times more volatile than IShares. It trades about 0.14 of its potential returns per unit of risk. IShares is currently generating about 0.04 per unit of risk. If you would invest 4,709 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,541 from holding Walmart or generate 96.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 27.79% |
| Values | Daily Returns |
Walmart vs. IShares
Performance |
| Timeline |
| Walmart |
| IShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and IShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares
The main advantage of trading using opposite Walmart and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares 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 IShares will offset losses from the drop in IShares' long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| IShares vs. Vanguard Mid Cap Value | IShares vs. SPDR SP Dividend | IShares vs. SCOR PK | IShares vs. HUMANA INC |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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