Correlation Between Walmart and ATT
Can any of the company-specific risk be diversified away by investing in both Walmart and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and ATT Inc, you can compare the effects of market volatilities on Walmart and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ATT.
Diversification Opportunities for Walmart and ATT
Excellent diversification
The 3 months correlation between Walmart and ATT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Walmart i.e., Walmart and ATT go up and down completely randomly.
Pair Corralation between Walmart and ATT
Considering the 90-day investment horizon Walmart is expected to generate 1.29 times more return on investment than ATT. However, Walmart is 1.29 times more volatile than ATT Inc. It trades about 0.53 of its potential returns per unit of risk. ATT Inc is currently generating about -0.12 per unit of risk. If you would invest 8,219 in Walmart on September 2, 2024 and sell it today you would earn a total of 1,031 from holding Walmart or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. ATT Inc
Performance |
| Timeline |
| Walmart |
| ATT Inc |
Walmart and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and ATT
The main advantage of trading using opposite Walmart and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| ATT vs. Telephone and Data | ATT vs. Telephone and Data | ATT vs. Palantir Technologies Class | ATT vs. Walmart |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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