Correlation Between Walmart and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Walmart and IShares ESG 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 IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and iShares ESG Screened, you can compare the effects of market volatilities on Walmart and IShares ESG 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 IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and IShares ESG.
Diversification Opportunities for Walmart and IShares ESG
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares ESG Screened in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Screened 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 IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Screened has no effect on the direction of Walmart i.e., Walmart and IShares ESG go up and down completely randomly.
Pair Corralation between Walmart and IShares ESG
Considering the 90-day investment horizon Walmart is expected to generate 0.65 times more return on investment than IShares ESG. However, Walmart is 1.55 times less risky than IShares ESG. It trades about 0.49 of its potential returns per unit of risk. iShares ESG Screened is currently generating about 0.23 per unit of risk. If you would invest 8,170 in Walmart on August 30, 2024 and sell it today you would earn a total of 1,018 from holding Walmart or generate 12.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. iShares ESG Screened
Performance |
| Timeline |
| Walmart |
| iShares ESG Screened |
Walmart and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and IShares ESG
The main advantage of trading using opposite Walmart and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| Walmart vs. Weis Markets | Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding |
| IShares ESG vs. iShares ESG Screened | IShares ESG vs. iShares ESG Screened | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Advanced |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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