Correlation Between Walmart and Corner Growth
Can any of the company-specific risk be diversified away by investing in both Walmart and Corner Growth 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 Corner Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Corner Growth Acquisition, you can compare the effects of market volatilities on Walmart and Corner Growth 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 Corner Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Corner Growth.
Diversification Opportunities for Walmart and Corner Growth
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Corner is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Corner Growth Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corner Growth Acquisition 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 Corner Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corner Growth Acquisition has no effect on the direction of Walmart i.e., Walmart and Corner Growth go up and down completely randomly.
Pair Corralation between Walmart and Corner Growth
Considering the 90-day investment horizon Walmart is expected to generate 73.21 times less return on investment than Corner Growth. But when comparing it to its historical volatility, Walmart is 126.99 times less risky than Corner Growth. It trades about 0.24 of its potential returns per unit of risk. Corner Growth Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2.99 in Corner Growth Acquisition on September 3, 2024 and sell it today you would lose (2.99) from holding Corner Growth Acquisition or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 44.94% |
| Values | Daily Returns |
Walmart vs. Corner Growth Acquisition
Performance |
| Timeline |
| Walmart |
| Corner Growth Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and Corner Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Corner Growth
The main advantage of trading using opposite Walmart and Corner Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Corner Growth 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 Corner Growth will offset losses from the drop in Corner Growth's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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