Correlation Between Walmart and Suzuki
Can any of the company-specific risk be diversified away by investing in both Walmart and Suzuki 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 Suzuki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Suzuki Motor, you can compare the effects of market volatilities on Walmart and Suzuki 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 Suzuki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Suzuki.
Diversification Opportunities for Walmart and Suzuki
Very good diversification
The 3 months correlation between Walmart and Suzuki is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Suzuki Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzuki Motor 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 Suzuki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzuki Motor has no effect on the direction of Walmart i.e., Walmart and Suzuki go up and down completely randomly.
Pair Corralation between Walmart and Suzuki
Considering the 90-day investment horizon Walmart is expected to generate 0.5 times more return on investment than Suzuki. However, Walmart is 2.01 times less risky than Suzuki. It trades about 0.4 of its potential returns per unit of risk. Suzuki Motor is currently generating about 0.13 per unit of risk. If you would invest 8,275 in Walmart on August 27, 2024 and sell it today you would earn a total of 769.00 from holding Walmart or generate 9.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Suzuki Motor
Performance |
| Timeline |
| Walmart |
| Suzuki Motor |
Walmart and Suzuki Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Suzuki
The main advantage of trading using opposite Walmart and Suzuki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Suzuki 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 Suzuki will offset losses from the drop in Suzuki's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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