Correlation Between Walmart and T REX
Can any of the company-specific risk be diversified away by investing in both Walmart and T REX 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 T REX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and T REX 2X Long, you can compare the effects of market volatilities on Walmart and T REX 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 T REX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and T REX.
Diversification Opportunities for Walmart and T REX
Very poor diversification
The 3 months correlation between Walmart and TSLT is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and T REX 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T REX 2X 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 T REX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T REX 2X has no effect on the direction of Walmart i.e., Walmart and T REX go up and down completely randomly.
Pair Corralation between Walmart and T REX
Considering the 90-day investment horizon Walmart is expected to generate 3.47 times less return on investment than T REX. But when comparing it to its historical volatility, Walmart is 7.22 times less risky than T REX. It trades about 0.23 of its potential returns per unit of risk. T REX 2X Long is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,069 in T REX 2X Long on September 3, 2024 and sell it today you would earn a total of 1,839 from holding T REX 2X Long or generate 172.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. T REX 2X Long
Performance |
| Timeline |
| Walmart |
| T REX 2X |
Walmart and T REX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and T REX
The main advantage of trading using opposite Walmart and T REX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, T REX 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 T REX will offset losses from the drop in T REX's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| T REX vs. ProShares Ultra SP500 | T REX vs. Direxion Daily SP500 | T REX vs. ProShares Ultra QQQ | T REX vs. Direxion Daily SP |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |