Correlation Between Walmart and Vertiv Holdings
Can any of the company-specific risk be diversified away by investing in both Walmart and Vertiv Holdings 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 Vertiv Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Vertiv Holdings Co, you can compare the effects of market volatilities on Walmart and Vertiv Holdings 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 Vertiv Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Vertiv Holdings.
Diversification Opportunities for Walmart and Vertiv Holdings
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Vertiv is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vertiv Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertiv Holdings 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 Vertiv Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertiv Holdings has no effect on the direction of Walmart i.e., Walmart and Vertiv Holdings go up and down completely randomly.
Pair Corralation between Walmart and Vertiv Holdings
Considering the 90-day investment horizon Walmart is expected to generate 0.46 times more return on investment than Vertiv Holdings. However, Walmart is 2.15 times less risky than Vertiv Holdings. It trades about -0.09 of its potential returns per unit of risk. Vertiv Holdings Co is currently generating about -0.06 per unit of risk. If you would invest 9,740 in Walmart on November 27, 2024 and sell it today you would lose (373.00) from holding Walmart or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Vertiv Holdings Co
Performance |
| Timeline |
| Walmart |
| Vertiv Holdings |
Walmart and Vertiv Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Vertiv Holdings
The main advantage of trading using opposite Walmart and Vertiv Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Vertiv Holdings 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 Vertiv Holdings will offset losses from the drop in Vertiv Holdings' long position.| Walmart vs. Target | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Vertiv Holdings vs. nVent Electric PLC | Vertiv Holdings vs. Hubbell | Vertiv Holdings vs. Advanced Energy Industries | Vertiv Holdings vs. Energizer 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 CEOs Directory module to screen CEOs from public companies around the world.
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