Correlation Between Walmart and Worldwide Healthcare

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

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

Diversification Opportunities for Walmart and Worldwide Healthcare

-0.76

Correlation Coefficient

Walmart  Worldwide Healthcare

Pay attention - limited upside

The 3 months correlation between Walmart and Worldwide is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Worldwide Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldwide Healthcare 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 Worldwide Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldwide Healthcare has no effect on the direction of Walmart i.e., Walmart and Worldwide Healthcare go up and down completely randomly.

Pair Corralation between Walmart and Worldwide Healthcare

Assuming the 90 days trading horizon Walmart is expected to generate 0.05 times more return on investment than Worldwide Healthcare. However, Walmart is 22.14 times less risky than Worldwide Healthcare. It trades about 0.13 of its potential returns per unit of risk. Worldwide Healthcare Trust is currently generating about -0.07 per unit of risk. If you would invest  5,939  in Walmart on October 26, 2024 and sell it today you would earn a total of  21.00  from holding Walmart or generate 0.35% return on investment over 90 days.

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

Walmart  vs.  Worldwide Healthcare Trust

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.

Worldwide Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worldwide Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Worldwide Healthcare 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 Worldwide Healthcare

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

The idea behind Walmart and Worldwide Healthcare Trust 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.