Correlation Between Walmart and Liberty Media

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

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

Diversification Opportunities for Walmart and Liberty Media

0.34

Correlation Coefficient

Walmart  Liberty Media

Weak diversification

The 3 months correlation between Walmart and Liberty is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Walmart i.e., Walmart and Liberty Media go up and down completely randomly.

Pair Corralation between Walmart and Liberty Media

Assuming the 90 days trading horizon Walmart is expected to generate 46.5 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Walmart is 33.76 times less risky than Liberty Media. It trades about 0.13 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  7,102  in Liberty Media Corp on October 10, 2024 and sell it today you would earn a total of  1,232  from holding Liberty Media Corp or generate 17.35% return on investment over 90 days.

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

Walmart  vs.  Liberty Media Corp

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

Liberty Media Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Liberty Media unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Liberty Media

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

The idea behind Walmart and Liberty Media Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.