Correlation Between Walmart and Innovative Industrial

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

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

Diversification Opportunities for Walmart and Innovative Industrial

-0.79

Correlation Coefficient

Walmart  Innovative Industrial

Pay attention - limited upside

The 3 months correlation between Walmart and Innovative is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial 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 Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Walmart i.e., Walmart and Innovative Industrial go up and down completely randomly.

Pair Corralation between Walmart and Innovative Industrial

Assuming the 90 days trading horizon Walmart is expected to generate 0.01 times more return on investment than Innovative Industrial. However, Walmart is 88.65 times less risky than Innovative Industrial. It trades about 0.13 of its potential returns per unit of risk. Innovative Industrial Properties is currently generating about -0.23 per unit of risk. If you would invest  5,939  in Walmart on October 10, 2024 and sell it today you would earn a total of  21.00  from holding Walmart or generate 0.35% return on investment over 90 days.

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

Walmart  vs.  Innovative Industrial Properti

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.

Innovative Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Walmart and Innovative Industrial Properties 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.