Correlation Between UNITED URBAN and Walmart

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

By analyzing existing cross correlation between UNITED URBAN INV and Walmart, you can compare the effects of market volatilities on UNITED URBAN and Walmart 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 UNITED URBAN with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED URBAN and Walmart.

Diversification Opportunities for UNITED URBAN and Walmart

0.46

Correlation Coefficient

UNITED URBAN  Walmart

Very weak diversification

The 3 months correlation between UNITED and Walmart is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding UNITED URBAN INV and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and UNITED URBAN 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 UNITED URBAN INV are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of UNITED URBAN i.e., UNITED URBAN and Walmart go up and down completely randomly.

Pair Corralation between UNITED URBAN and Walmart

Assuming the 90 days horizon UNITED URBAN INV is expected to generate 1.25 times more return on investment than Walmart. However, UNITED URBAN is 1.25 times more volatile than Walmart. It trades about 0.1 of its potential returns per unit of risk. Walmart is currently generating about -0.09 per unit of risk. If you would invest  80,500  in UNITED URBAN INV on December 29, 2024 and sell it today you would earn a total of  11,000  from holding UNITED URBAN INV or generate 13.66% return on investment over 90 days.

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

UNITED URBAN INV  vs.  Walmart

UNITED URBAN INV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED URBAN INV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, UNITED URBAN reported solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with UNITED URBAN and Walmart

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

The idea behind UNITED URBAN INV and Walmart 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.