Correlation Between United States and Walmart
Can any of the company-specific risk be diversified away by investing in both United States and Walmart 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 United States and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Walmart, you can compare the effects of market volatilities on United States and Walmart 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 United States with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Walmart.
Diversification Opportunities for United States and Walmart
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Walmart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and United States 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 United States Steel are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of United States i.e., United States and Walmart go up and down completely randomly.
Pair Corralation between United States and Walmart
Given the investment horizon of 90 days United States Steel is expected to generate 0.81 times more return on investment than Walmart. However, United States Steel is 1.24 times less risky than Walmart. It trades about 0.09 of its potential returns per unit of risk. Walmart is currently generating about 0.03 per unit of risk. If you would invest 288,550 in United States Steel on September 19, 2024 and sell it today you would earn a total of 928,950 from holding United States Steel or generate 321.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Walmart
Performance |
| Timeline |
| United States Steel |
| Walmart |
United States and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Walmart
The main advantage of trading using opposite United States and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| United States vs. Edesa Holding SA | United States vs. Vista Energy, SAB | United States vs. Pfizer Inc | United States vs. Molinos Agro SA |
| Walmart vs. Compania de Transporte | Walmart vs. Harmony Gold Mining | Walmart vs. Agrometal SAI | Walmart vs. United States Steel |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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