Correlation Between Walmart and Roper Technologies

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

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

Diversification Opportunities for Walmart and Roper Technologies

0.1

Correlation Coefficient

Walmart  Roper Technologies

Average diversification

The 3 months correlation between Walmart and Roper is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Roper Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies 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 Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies has no effect on the direction of Walmart i.e., Walmart and Roper Technologies go up and down completely randomly.

Pair Corralation between Walmart and Roper Technologies

Assuming the 90 days trading horizon Walmart is expected to generate 22.41 times less return on investment than Roper Technologies. But when comparing it to its historical volatility, Walmart is 23.33 times less risky than Roper Technologies. It trades about 0.13 of its potential returns per unit of risk. Roper Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  52,464  in Roper Technologies on December 23, 2024 and sell it today you would earn a total of  4,491  from holding Roper Technologies or generate 8.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  Roper Technologies

Walmart

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) 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.

Roper Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roper Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Roper Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Roper Technologies

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

The idea behind Walmart and Roper Technologies 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.