Correlation Between Walmart and Datalogic

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

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

Diversification Opportunities for Walmart and Datalogic

-0.51

Correlation Coefficient

Walmart  Datalogic

Excellent diversification

The 3 months correlation between Walmart and Datalogic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Datalogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datalogic 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 Datalogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datalogic has no effect on the direction of Walmart i.e., Walmart and Datalogic go up and down completely randomly.

Pair Corralation between Walmart and Datalogic

Assuming the 90 days trading horizon Walmart is expected to generate 5.8 times more return on investment than Datalogic. However, Walmart is 5.8 times more volatile than Datalogic. It trades about 0.04 of its potential returns per unit of risk. Datalogic is currently generating about -0.02 per unit of risk. If you would invest  4,402  in Walmart on October 9, 2024 and sell it today you would earn a total of  1,558  from holding Walmart or generate 35.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Walmart  vs.  Datalogic

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.

Datalogic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datalogic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting 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 Datalogic

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

The idea behind Walmart and Datalogic 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.