Correlation Between Walmart and News Corp
Can any of the company-specific risk be diversified away by investing in both Walmart and News Corp 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 News Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and News Corp Cl, you can compare the effects of market volatilities on Walmart and News Corp 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 News Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and News Corp.
Diversification Opportunities for Walmart and News Corp
Excellent diversification
The 3 months correlation between Walmart and News is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and News Corp Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp Cl 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp Cl has no effect on the direction of Walmart i.e., Walmart and News Corp go up and down completely randomly.
Pair Corralation between Walmart and News Corp
Assuming the 90 days trading horizon Walmart is expected to generate 10.59 times more return on investment than News Corp. However, Walmart is 10.59 times more volatile than News Corp Cl. It trades about 0.05 of its potential returns per unit of risk. News Corp Cl is currently generating about 0.04 per unit of risk. If you would invest 4,328 in Walmart on October 25, 2024 and sell it today you would earn a total of 1,632 from holding Walmart or generate 37.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 92.12% |
Values | Daily Returns |
Walmart vs. News Corp Cl
Performance |
Timeline |
Walmart |
News Corp Cl |
Walmart and News Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and News Corp
The main advantage of trading using opposite Walmart and News Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, News Corp 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 News Corp will offset losses from the drop in News Corp's long position.Walmart vs. Spire Healthcare Group | Walmart vs. Eco Animal Health | Walmart vs. JLEN Environmental Assets | Walmart vs. Foresight Environmental Infrastructure |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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