Correlation Between Walmart and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Walmart and Franklin Mutual 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 Franklin Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Franklin Mutual Financial, you can compare the effects of market volatilities on Walmart and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Franklin Mutual.
Diversification Opportunities for Walmart and Franklin Mutual
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Franklin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Franklin Mutual Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Financial 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Financial has no effect on the direction of Walmart i.e., Walmart and Franklin Mutual go up and down completely randomly.
Pair Corralation between Walmart and Franklin Mutual
Considering the 90-day investment horizon Walmart is expected to generate 0.84 times more return on investment than Franklin Mutual. However, Walmart is 1.19 times less risky than Franklin Mutual. It trades about 0.13 of its potential returns per unit of risk. Franklin Mutual Financial is currently generating about 0.02 per unit of risk. If you would invest 4,725 in Walmart on August 30, 2024 and sell it today you would earn a total of 4,463 from holding Walmart or generate 94.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.31% |
| Values | Daily Returns |
Walmart vs. Franklin Mutual Financial
Performance |
| Timeline |
| Walmart |
| Franklin Mutual Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Franklin Mutual
The main advantage of trading using opposite Walmart and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Franklin Mutual vs. Franklin Mutual European | Franklin Mutual vs. Franklin Natural Resources | Franklin Mutual vs. Franklin Real Estate | Franklin Mutual vs. Franklin Utilities Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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