Correlation Between Walmart and United Airlines

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

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

Diversification Opportunities for Walmart and United Airlines

-0.25

Correlation Coefficient

Walmart  United Airlines

Very good diversification

The 3 months correlation between Walmart and United is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Walmart i.e., Walmart and United Airlines go up and down completely randomly.

Pair Corralation between Walmart and United Airlines

Assuming the 90 days trading horizon Walmart is expected to generate 0.02 times more return on investment than United Airlines. However, Walmart is 60.09 times less risky than United Airlines. It trades about 0.13 of its potential returns per unit of risk. United Airlines Holdings is currently generating about -0.15 per unit of risk. If you would invest  5,937  in Walmart on December 24, 2024 and sell it today you would earn a total of  23.00  from holding Walmart or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Walmart  vs.  United Airlines Holdings

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.

United Airlines Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Airlines Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Walmart and United Airlines

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

The idea behind Walmart and United Airlines Holdings 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.