Correlation Between Walmart and Transamerica
Can any of the company-specific risk be diversified away by investing in both Walmart and Transamerica 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 Transamerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Transamerica Growth R6, you can compare the effects of market volatilities on Walmart and Transamerica 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 Transamerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Transamerica.
Diversification Opportunities for Walmart and Transamerica
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Transamerica is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Transamerica Growth R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Growth 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 Transamerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Growth has no effect on the direction of Walmart i.e., Walmart and Transamerica go up and down completely randomly.
Pair Corralation between Walmart and Transamerica
Considering the 90-day investment horizon Walmart is expected to generate 1.14 times more return on investment than Transamerica. However, Walmart is 1.14 times more volatile than Transamerica Growth R6. It trades about 0.54 of its potential returns per unit of risk. Transamerica Growth R6 is currently generating about 0.27 per unit of risk. If you would invest 8,195 in Walmart on September 1, 2024 and sell it today you would earn a total of 1,055 from holding Walmart or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Transamerica Growth R6
Performance |
| Timeline |
| Walmart |
| Transamerica Growth |
Walmart and Transamerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Transamerica
The main advantage of trading using opposite Walmart and Transamerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Transamerica 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 Transamerica will offset losses from the drop in Transamerica's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc |
| Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Emerging Markets | Transamerica vs. Transamerica Capital Growth |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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