Correlation Between Walmart and Transat AT
Can any of the company-specific risk be diversified away by investing in both Walmart and Transat AT 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 Transat AT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Transat AT, you can compare the effects of market volatilities on Walmart and Transat AT 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 Transat AT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Transat AT.
Diversification Opportunities for Walmart and Transat AT
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Transat is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Transat AT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transat AT 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 Transat AT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transat AT has no effect on the direction of Walmart i.e., Walmart and Transat AT go up and down completely randomly.
Pair Corralation between Walmart and Transat AT
Considering the 90-day investment horizon Walmart is expected to generate 0.42 times more return on investment than Transat AT. However, Walmart is 2.4 times less risky than Transat AT. It trades about 0.16 of its potential returns per unit of risk. Transat AT is currently generating about -0.08 per unit of risk. If you would invest 4,909 in Walmart on August 27, 2024 and sell it today you would earn a total of 4,135 from holding Walmart or generate 84.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Transat AT
Performance |
| Timeline |
| Walmart |
| Transat AT |
Walmart and Transat AT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Transat AT
The main advantage of trading using opposite Walmart and Transat AT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Transat AT 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 Transat AT will offset losses from the drop in Transat AT's long position.| Walmart vs. Innovative Food Hldg | Walmart vs. Calavo Growers | Walmart vs. The Chefs Warehouse | Walmart vs. AMCON Distributing |
| Transat AT vs. FitLife Brands, Common | Transat AT vs. HUMANA INC | Transat AT vs. SCOR PK | Transat AT vs. Aquagold International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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