Correlation Between Walmart and Innovator Growth
Can any of the company-specific risk be diversified away by investing in both Walmart and Innovator Growth 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 Innovator Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on Walmart and Innovator Growth 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 Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Innovator Growth.
Diversification Opportunities for Walmart and Innovator Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Innovator is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of Walmart i.e., Walmart and Innovator Growth go up and down completely randomly.
Pair Corralation between Walmart and Innovator Growth
Considering the 90-day investment horizon Walmart is expected to generate 1.15 times more return on investment than Innovator Growth. However, Walmart is 1.15 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.34 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.16 per unit of risk. If you would invest 8,275 in Walmart on August 28, 2024 and sell it today you would earn a total of 675.00 from holding Walmart or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Innovator Growth 100 Accelerat
Performance |
| Timeline |
| Walmart |
| Innovator Growth 100 |
Walmart and Innovator Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Innovator Growth
The main advantage of trading using opposite Walmart and Innovator Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Innovator Growth 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 Innovator Growth will offset losses from the drop in Innovator Growth's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Innovator Growth vs. Direxion Daily SP | Innovator Growth vs. Direxion Daily Semiconductor | Innovator Growth vs. Direxion Daily Semiconductor |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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