Correlation Between Walmart and Global Net

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

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

Diversification Opportunities for Walmart and Global Net

0.16

Correlation Coefficient

Walmart  Global Net

Average diversification

The 3 months correlation between Walmart and Global is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Walmart i.e., Walmart and Global Net go up and down completely randomly.

Pair Corralation between Walmart and Global Net

Assuming the 90 days trading horizon Walmart is expected to generate 38.76 times less return on investment than Global Net. But when comparing it to its historical volatility, Walmart is 33.59 times less risky than Global Net. It trades about 0.13 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  688.00  in Global Net Lease on December 24, 2024 and sell it today you would earn a total of  102.00  from holding Global Net Lease or generate 14.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Walmart  vs.  Global Net Lease

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.

Global Net Lease

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Global Net unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Global Net

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

The idea behind Walmart and Global Net Lease 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.