Correlation Between Walmart and Oxford Technology

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

By analyzing existing cross correlation between Walmart and Oxford Technology 2, you can compare the effects of market volatilities on Walmart and Oxford Technology 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 Oxford Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Oxford Technology.

Diversification Opportunities for Walmart and Oxford Technology

-0.14

Correlation Coefficient

Walmart  Oxford Technology

Good diversification

The 3 months correlation between Walmart and Oxford is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Oxford Technology 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Technology 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 Oxford Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Technology has no effect on the direction of Walmart i.e., Walmart and Oxford Technology go up and down completely randomly.

Pair Corralation between Walmart and Oxford Technology

Assuming the 90 days trading horizon Walmart is expected to generate 5.04 times more return on investment than Oxford Technology. However, Walmart is 5.04 times more volatile than Oxford Technology 2. It trades about 0.04 of its potential returns per unit of risk. Oxford Technology 2 is currently generating about -0.12 per unit of risk. If you would invest  4,402  in Walmart on October 9, 2024 and sell it today you would earn a total of  1,558  from holding Walmart or generate 35.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Walmart  vs.  Oxford Technology 2

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Oxford Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oxford Technology 2 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oxford Technology is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and Oxford Technology

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

The idea behind Walmart and Oxford Technology 2 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 Valuation module to check real value of public entities based on technical and fundamental data.