Correlation Between Walmart and Schweiter Technologies

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

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

Diversification Opportunities for Walmart and Schweiter Technologies

-0.29

Correlation Coefficient

Walmart  Schweiter Technologies

Very good diversification

The 3 months correlation between Walmart and Schweiter is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Walmart i.e., Walmart and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Walmart and Schweiter Technologies

Assuming the 90 days trading horizon Walmart is expected to generate 13.29 times less return on investment than Schweiter Technologies. But when comparing it to its historical volatility, Walmart is 39.73 times less risky than Schweiter Technologies. It trades about 0.13 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  40,350  in Schweiter Technologies AG on December 24, 2024 and sell it today you would earn a total of  1,650  from holding Schweiter Technologies AG or generate 4.09% return on investment over 90 days.

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

Walmart  vs.  Schweiter Technologies AG

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.

Schweiter Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Schweiter Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and Schweiter Technologies

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

The idea behind Walmart and Schweiter Technologies AG 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 CEOs Directory module to screen CEOs from public companies around the world.