Correlation Between Apple and Wal Mart

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

By analyzing existing cross correlation between Apple Inc and Wal Mart de Mxico, you can compare the effects of market volatilities on Apple and Wal Mart 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 Apple with a short position of Wal Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Wal Mart.

Diversification Opportunities for Apple and Wal Mart

0.1

Correlation Coefficient

Apple  Wal Mart

Average diversification

The 3 months correlation between Apple and Wal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and Apple 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 Apple Inc are associated (or correlated) with Wal Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of Apple i.e., Apple and Wal Mart go up and down completely randomly.

Pair Corralation between Apple and Wal Mart

Assuming the 90 days trading horizon Apple Inc is expected to under-perform the Wal Mart. In addition to that, Apple is 1.05 times more volatile than Wal Mart de Mxico. It trades about -0.12 of its total potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.06 per unit of volatility. If you would invest  5,428  in Wal Mart de Mxico on December 30, 2024 and sell it today you would earn a total of  300.00  from holding Wal Mart de Mxico or generate 5.53% return on investment over 90 days.

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

Apple Inc  vs.  Wal Mart de Mxico

Apple Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wal Mart de

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Wal Mart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Apple and Wal Mart

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

The idea behind Apple Inc and Wal Mart de Mxico 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.