Correlation Between Walmart and Universal Media
Can any of the company-specific risk be diversified away by investing in both Walmart and Universal Media 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 Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Universal Media Group, you can compare the effects of market volatilities on Walmart and Universal Media 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 Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Universal Media.
Diversification Opportunities for Walmart and Universal Media
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Universal is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group 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 Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of Walmart i.e., Walmart and Universal Media go up and down completely randomly.
Pair Corralation between Walmart and Universal Media
Considering the 90-day investment horizon Walmart is expected to generate 1.42 times less return on investment than Universal Media. But when comparing it to its historical volatility, Walmart is 11.25 times less risky than Universal Media. It trades about 0.13 of its potential returns per unit of risk. Universal Media Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Universal Media Group on August 30, 2024 and sell it today you would lose (37.31) from holding Universal Media Group or give up 91.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Universal Media Group
Performance |
| Timeline |
| Walmart |
| Universal Media Group |
Walmart and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Universal Media
The main advantage of trading using opposite Walmart and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Universal Media vs. Kura Sushi USA | Universal Media vs. Kinsale Capital Group | Universal Media vs. GoHealth | Universal Media vs. RCI Hospitality Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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