Correlation Between Walmart and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Walmart and FT Cboe 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 FT Cboe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and FT Cboe Vest, you can compare the effects of market volatilities on Walmart and FT Cboe 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 FT Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and FT Cboe.
Diversification Opportunities for Walmart and FT Cboe
Very poor diversification
The 3 months correlation between Walmart and XOCT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Walmart i.e., Walmart and FT Cboe go up and down completely randomly.
Pair Corralation between Walmart and FT Cboe
Considering the 90-day investment horizon Walmart is expected to generate 6.35 times more return on investment than FT Cboe. However, Walmart is 6.35 times more volatile than FT Cboe Vest. It trades about 0.17 of its potential returns per unit of risk. FT Cboe Vest is currently generating about 0.21 per unit of risk. If you would invest 5,423 in Walmart on September 1, 2024 and sell it today you would earn a total of 3,827 from holding Walmart or generate 70.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. FT Cboe Vest
Performance |
| Timeline |
| Walmart |
| FT Cboe Vest |
Walmart and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and FT Cboe
The main advantage of trading using opposite Walmart and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, FT Cboe 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 FT Cboe will offset losses from the drop in FT Cboe's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc |
| FT Cboe vs. FT Vest Equity | FT Cboe vs. Northern Lights | FT Cboe vs. Dimensional International High | FT Cboe vs. Matthews China Discovery |
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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