Correlation Between Walmart and Total Income
Can any of the company-specific risk be diversified away by investing in both Walmart and Total Income 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 Total Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Total Income Real, you can compare the effects of market volatilities on Walmart and Total Income 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 Total Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Total Income.
Diversification Opportunities for Walmart and Total Income
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Total is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Total Income Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Income Real 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 Total Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Income Real has no effect on the direction of Walmart i.e., Walmart and Total Income go up and down completely randomly.
Pair Corralation between Walmart and Total Income
Considering the 90-day investment horizon Walmart is expected to generate 1.07 times more return on investment than Total Income. However, Walmart is 1.07 times more volatile than Total Income Real. It trades about 0.15 of its potential returns per unit of risk. Total Income Real is currently generating about -0.03 per unit of risk. If you would invest 4,696 in Walmart on September 8, 2024 and sell it today you would earn a total of 4,874 from holding Walmart or generate 103.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Walmart vs. Total Income Real
Performance |
Timeline |
Walmart |
Total Income Real |
Walmart and Total Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and Total Income
The main advantage of trading using opposite Walmart and Total Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Total Income 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 Total Income will offset losses from the drop in Total Income'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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