Correlation Between Walmart and Qurate Retail

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

By analyzing existing cross correlation between Walmart and Qurate Retail Series, you can compare the effects of market volatilities on Walmart and Qurate Retail 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 Qurate Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Qurate Retail.

Diversification Opportunities for Walmart and Qurate Retail

-0.55

Correlation Coefficient

Walmart  Qurate Retail

Excellent diversification

The 3 months correlation between Walmart and Qurate is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Qurate Retail Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qurate Retail Series 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 Qurate Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qurate Retail Series has no effect on the direction of Walmart i.e., Walmart and Qurate Retail go up and down completely randomly.

Pair Corralation between Walmart and Qurate Retail

Assuming the 90 days trading horizon Walmart is expected to generate 24.78 times less return on investment than Qurate Retail. But when comparing it to its historical volatility, Walmart is 44.26 times less risky than Qurate Retail. It trades about 0.23 of its potential returns per unit of risk. Qurate Retail Series is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Qurate Retail Series on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Qurate Retail Series or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Walmart  vs.  Qurate Retail Series

Walmart

Risk-Adjusted Performance

10 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Qurate Retail Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qurate Retail Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Walmart and Qurate Retail

The main advantage of trading using opposite Walmart and Qurate Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Qurate Retail 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 Qurate Retail will offset losses from the drop in Qurate Retail's long position.

The idea behind Walmart and Qurate Retail Series 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.