Correlation Between Walmart and THC Biomed
Can any of the company-specific risk be diversified away by investing in both Walmart and THC Biomed 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 THC Biomed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and THC Biomed Intl, you can compare the effects of market volatilities on Walmart and THC Biomed 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 THC Biomed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and THC Biomed.
Diversification Opportunities for Walmart and THC Biomed
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and THC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and THC Biomed Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THC Biomed Intl 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 THC Biomed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THC Biomed Intl has no effect on the direction of Walmart i.e., Walmart and THC Biomed go up and down completely randomly.
Pair Corralation between Walmart and THC Biomed
Considering the 90-day investment horizon Walmart is expected to generate 16.55 times less return on investment than THC Biomed. But when comparing it to its historical volatility, Walmart is 30.6 times less risky than THC Biomed. It trades about 0.22 of its potential returns per unit of risk. THC Biomed Intl is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.60 in THC Biomed Intl on August 29, 2024 and sell it today you would lose (1.50) from holding THC Biomed Intl or give up 93.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Walmart vs. THC Biomed Intl
Performance |
| Timeline |
| Walmart |
| THC Biomed Intl |
Walmart and THC Biomed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and THC Biomed
The main advantage of trading using opposite Walmart and THC Biomed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, THC Biomed 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 THC Biomed will offset losses from the drop in THC Biomed's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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