Correlation Between Walmart and VMG Consumer
Can any of the company-specific risk be diversified away by investing in both Walmart and VMG Consumer 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 VMG Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and VMG Consumer Acquisition, you can compare the effects of market volatilities on Walmart and VMG Consumer 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 VMG Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and VMG Consumer.
Diversification Opportunities for Walmart and VMG Consumer
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and VMG is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and VMG Consumer Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMG Consumer Acquisition 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 VMG Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMG Consumer Acquisition has no effect on the direction of Walmart i.e., Walmart and VMG Consumer go up and down completely randomly.
Pair Corralation between Walmart and VMG Consumer
Considering the 90-day investment horizon Walmart is expected to generate 40.26 times more return on investment than VMG Consumer. However, Walmart is 40.26 times more volatile than VMG Consumer Acquisition. It trades about 0.15 of its potential returns per unit of risk. VMG Consumer Acquisition is currently generating about -0.28 per unit of risk. If you would invest 5,005 in Walmart on August 30, 2024 and sell it today you would earn a total of 4,183 from holding Walmart or generate 83.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 3.3% |
| Values | Daily Returns |
Walmart vs. VMG Consumer Acquisition
Performance |
| Timeline |
| Walmart |
| VMG Consumer Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and VMG Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and VMG Consumer
The main advantage of trading using opposite Walmart and VMG Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, VMG Consumer 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 VMG Consumer will offset losses from the drop in VMG Consumer's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |