Correlation Between G8 EDUCATION and Walmart

Can any of the company-specific risk be diversified away by investing in both G8 EDUCATION 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 G8 EDUCATION and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G8 EDUCATION and Walmart, you can compare the effects of market volatilities on G8 EDUCATION 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 G8 EDUCATION with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 EDUCATION and Walmart.

Diversification Opportunities for G8 EDUCATION and Walmart

-0.41

Correlation Coefficient

G8 EDUCATION  Walmart

Very good diversification

The 3 months correlation between 3EAG and Walmart is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding G8 EDUCATION and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and G8 EDUCATION 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 G8 EDUCATION 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 G8 EDUCATION i.e., G8 EDUCATION and Walmart go up and down completely randomly.

Pair Corralation between G8 EDUCATION and Walmart

Assuming the 90 days trading horizon G8 EDUCATION is expected to generate 2.75 times less return on investment than Walmart. In addition to that, G8 EDUCATION is 1.25 times more volatile than Walmart. It trades about 0.06 of its total potential returns per unit of risk. Walmart is currently generating about 0.2 per unit of volatility. If you would invest  6,252  in Walmart on September 29, 2024 and sell it today you would earn a total of  2,500  from holding Walmart or generate 39.99% return on investment over 90 days.

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

G8 EDUCATION  vs.  Walmart

G8 EDUCATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G8 EDUCATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G8 EDUCATION and Walmart

The main advantage of trading using opposite G8 EDUCATION and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 EDUCATION 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 G8 EDUCATION 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.