Correlation Between Walmart and CITIGROUP

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Can any of the company-specific risk be diversified away by investing in both Walmart and CITIGROUP 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 CITIGROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and CITIGROUP INC 33, you can compare the effects of market volatilities on Walmart and CITIGROUP 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 CITIGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and CITIGROUP.

Diversification Opportunities for Walmart and CITIGROUP

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Walmart and CITIGROUP is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and CITIGROUP INC 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIGROUP INC 33 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 CITIGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIGROUP INC 33 has no effect on the direction of Walmart i.e., Walmart and CITIGROUP go up and down completely randomly.

Pair Corralation between Walmart and CITIGROUP

Considering the 90-day investment horizon Walmart is expected to generate 1.62 times more return on investment than CITIGROUP. However, Walmart is 1.62 times more volatile than CITIGROUP INC 33. It trades about 0.37 of its potential returns per unit of risk. CITIGROUP INC 33 is currently generating about -0.2 per unit of risk. If you would invest  8,304  in Walmart on August 25, 2024 and sell it today you would earn a total of  740.00  from holding Walmart or generate 8.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Walmart  vs.  CITIGROUP INC 33

 Performance 
       Timeline  
Walmart 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.
CITIGROUP INC 33 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CITIGROUP INC 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CITIGROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walmart and CITIGROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and CITIGROUP

The main advantage of trading using opposite Walmart and CITIGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, CITIGROUP 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 CITIGROUP will offset losses from the drop in CITIGROUP's long position.
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The idea behind Walmart and CITIGROUP INC 33 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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