Correlation Between KAR Auction and Walmart
Can any of the company-specific risk be diversified away by investing in both KAR Auction 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 KAR Auction and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Walmart, you can compare the effects of market volatilities on KAR Auction 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 KAR Auction with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Walmart.
Diversification Opportunities for KAR Auction and Walmart
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KAR and Walmart is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and KAR Auction 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 KAR Auction Services 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 KAR Auction i.e., KAR Auction and Walmart go up and down completely randomly.
Pair Corralation between KAR Auction and Walmart
Assuming the 90 days horizon KAR Auction is expected to generate 1.73 times less return on investment than Walmart. In addition to that, KAR Auction is 1.03 times more volatile than Walmart. It trades about 0.16 of its total potential returns per unit of risk. Walmart is currently generating about 0.29 per unit of volatility. If you would invest 8,787 in Walmart on November 1, 2024 and sell it today you would earn a total of 577.00 from holding Walmart or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Walmart
Performance |
| Timeline |
| KAR Auction Services |
| Walmart |
KAR Auction and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Walmart
The main advantage of trading using opposite KAR Auction and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction 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.| KAR Auction vs. FUYO GENERAL LEASE | KAR Auction vs. AGNC INVESTMENT | KAR Auction vs. FIRST SAVINGS FINL | KAR Auction vs. FIRST SHIP LEASE |
| Walmart vs. American Public Education | Walmart vs. Siamgas And Petrochemicals | Walmart vs. betterU Education Corp | Walmart vs. DEVRY EDUCATION GRP |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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