Correlation Between Walmart and Wilmington Trust
Can any of the company-specific risk be diversified away by investing in both Walmart and Wilmington Trust 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 Wilmington Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Wilmington Trust Retirement, you can compare the effects of market volatilities on Walmart and Wilmington Trust 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 Wilmington Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Wilmington Trust.
Diversification Opportunities for Walmart and Wilmington Trust
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Wilmington is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Wilmington Trust Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Trust Ret 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 Wilmington Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Trust Ret has no effect on the direction of Walmart i.e., Walmart and Wilmington Trust go up and down completely randomly.
Pair Corralation between Walmart and Wilmington Trust
Considering the 90-day investment horizon Walmart is expected to generate 1.09 times more return on investment than Wilmington Trust. However, Walmart is 1.09 times more volatile than Wilmington Trust Retirement. It trades about 0.23 of its potential returns per unit of risk. Wilmington Trust Retirement is currently generating about 0.08 per unit of risk. If you would invest 5,134 in Walmart on September 14, 2024 and sell it today you would earn a total of 4,304 from holding Walmart or generate 83.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Walmart vs. Wilmington Trust Retirement
Performance |
| Timeline |
| Walmart |
| Wilmington Trust Ret |
Walmart and Wilmington Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Wilmington Trust
The main advantage of trading using opposite Walmart and Wilmington Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Wilmington Trust 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 Wilmington Trust will offset losses from the drop in Wilmington Trust's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Wilmington Trust vs. Ashmore Emerging Markets | Wilmington Trust vs. Shelton Emerging Markets | Wilmington Trust vs. Siit Emerging Markets | Wilmington Trust vs. Western Asset Diversified |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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