Correlation Between Technicolor and Walmart

Can any of the company-specific risk be diversified away by investing in both Technicolor 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 Technicolor and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Technicolor and Walmart, you can compare the effects of market volatilities on Technicolor 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 Technicolor with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technicolor and Walmart.

Diversification Opportunities for Technicolor and Walmart

0.2

Correlation Coefficient

Technicolor  Walmart

Modest diversification

The 3 months correlation between Technicolor and Walmart is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Technicolor and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Technicolor 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 Technicolor 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 Technicolor i.e., Technicolor and Walmart go up and down completely randomly.

Pair Corralation between Technicolor and Walmart

Assuming the 90 days trading horizon Technicolor is expected to generate 116.16 times more return on investment than Walmart. However, Technicolor is 116.16 times more volatile than Walmart. It trades about 0.12 of its potential returns per unit of risk. Walmart is currently generating about 0.13 per unit of risk. If you would invest  12.00  in Technicolor on December 26, 2024 and sell it today you would earn a total of  5.00  from holding Technicolor or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Technicolor  vs.  Walmart

Technicolor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technicolor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Technicolor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Technicolor and Walmart

The main advantage of trading using opposite Technicolor and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technicolor 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.

The idea behind Technicolor and Walmart pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.