Correlation Between Walmart and G5 Entertainment

Can any of the company-specific risk be diversified away by investing in both Walmart and G5 Entertainment 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 G5 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and G5 Entertainment AB, you can compare the effects of market volatilities on Walmart and G5 Entertainment 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 G5 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and G5 Entertainment.

Diversification Opportunities for Walmart and G5 Entertainment

0.79

Correlation Coefficient

Walmart  G5 Entertainment

Poor diversification

The 3 months correlation between Walmart and 0QUS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and G5 Entertainment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G5 Entertainment 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 G5 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G5 Entertainment has no effect on the direction of Walmart i.e., Walmart and G5 Entertainment go up and down completely randomly.

Pair Corralation between Walmart and G5 Entertainment

Assuming the 90 days trading horizon Walmart is expected to generate 79.62 times less return on investment than G5 Entertainment. But when comparing it to its historical volatility, Walmart is 54.42 times less risky than G5 Entertainment. It trades about 0.13 of its potential returns per unit of risk. G5 Entertainment AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  9,070  in G5 Entertainment AB on October 24, 2024 and sell it today you would earn a total of  2,730  from holding G5 Entertainment AB or generate 30.1% return on investment over 90 days.

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

Walmart  vs.  G5 Entertainment AB

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.

G5 Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in G5 Entertainment AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, G5 Entertainment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and G5 Entertainment

The main advantage of trading using opposite Walmart and G5 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, G5 Entertainment 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 G5 Entertainment will offset losses from the drop in G5 Entertainment's long position.

The idea behind Walmart and G5 Entertainment AB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.