Correlation Between Alfa Financial and Walmart

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

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

Diversification Opportunities for Alfa Financial and Walmart

-0.18

Correlation Coefficient

Alfa Financial  Walmart

Good diversification

The 3 months correlation between Alfa and Walmart is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Alfa Financial 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 Alfa Financial Software 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 Alfa Financial i.e., Alfa Financial and Walmart go up and down completely randomly.

Pair Corralation between Alfa Financial and Walmart

Assuming the 90 days trading horizon Alfa Financial Software is expected to generate 49.4 times more return on investment than Walmart. However, Alfa Financial is 49.4 times more volatile than Walmart. It trades about 0.07 of its potential returns per unit of risk. Walmart is currently generating about 0.13 per unit of risk. If you would invest  18,357  in Alfa Financial Software on October 8, 2024 and sell it today you would earn a total of  3,443  from holding Alfa Financial Software or generate 18.76% return on investment over 90 days.

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

Alfa Financial Software  vs.  Walmart

Alfa Financial Software

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alfa Financial Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Alfa Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Alfa Financial and Walmart

The main advantage of trading using opposite Alfa Financial and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alfa Financial 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 Alfa Financial Software 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.