Correlation Between Walmart and IShares Treasury
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares Treasury 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 Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and iShares Treasury Floating, you can compare the effects of market volatilities on Walmart and IShares Treasury 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 Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares Treasury.
Diversification Opportunities for Walmart and IShares Treasury
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares Treasury Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Treasury Floating 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 Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Treasury Floating has no effect on the direction of Walmart i.e., Walmart and IShares Treasury go up and down completely randomly.
Pair Corralation between Walmart and IShares Treasury
Considering the 90-day investment horizon Walmart is expected to generate 63.88 times more return on investment than IShares Treasury. However, Walmart is 63.88 times more volatile than iShares Treasury Floating. It trades about 0.51 of its potential returns per unit of risk. iShares Treasury Floating is currently generating about 1.24 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. iShares Treasury Floating
Performance |
| Timeline |
| Walmart |
| iShares Treasury Floating |
Walmart and IShares Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares Treasury
The main advantage of trading using opposite Walmart and IShares Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares Treasury 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 Treasury will offset losses from the drop in IShares Treasury's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| IShares Treasury vs. WisdomTree Floating Rate | IShares Treasury vs. iShares 0 3 Month | IShares Treasury vs. iShares Ultra Short Term | IShares Treasury vs. iShares Floating Rate |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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