Correlation Between Walmart and WisdomTree Floating
Can any of the company-specific risk be diversified away by investing in both Walmart and WisdomTree Floating 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 WisdomTree Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and WisdomTree Floating Rate, you can compare the effects of market volatilities on Walmart and WisdomTree Floating 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 WisdomTree Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and WisdomTree Floating.
Diversification Opportunities for Walmart and WisdomTree Floating
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and WisdomTree is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and WisdomTree Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Floating Rate 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 WisdomTree Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Floating Rate has no effect on the direction of Walmart i.e., Walmart and WisdomTree Floating go up and down completely randomly.
Pair Corralation between Walmart and WisdomTree Floating
Considering the 90-day investment horizon Walmart is expected to generate 71.36 times more return on investment than WisdomTree Floating. However, Walmart is 71.36 times more volatile than WisdomTree Floating Rate. It trades about 0.31 of its potential returns per unit of risk. WisdomTree Floating Rate is currently generating about 1.22 per unit of risk. If you would invest 8,389 in Walmart on November 18, 2024 and sell it today you would earn a total of 2,015 from holding Walmart or generate 24.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. WisdomTree Floating Rate
Performance |
| Timeline |
| Walmart |
| WisdomTree Floating Rate |
Walmart and WisdomTree Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and WisdomTree Floating
The main advantage of trading using opposite Walmart and WisdomTree Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, WisdomTree Floating 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 WisdomTree Floating will offset losses from the drop in WisdomTree Floating's long position.| Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General | Walmart vs. Grocery Outlet Holding | Walmart vs. Kroger Company |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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