Correlation Between Sendas Distribuidora and Walmart

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

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

Diversification Opportunities for Sendas Distribuidora and Walmart

0.29

Correlation Coefficient

Sendas Distribuidora  Walmart

Modest diversification

The 3 months correlation between Sendas and Walmart is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sendas Distribuidora SA and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Sendas Distribuidora 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 Sendas Distribuidora SA 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 Sendas Distribuidora i.e., Sendas Distribuidora and Walmart go up and down completely randomly.

Pair Corralation between Sendas Distribuidora and Walmart

Given the investment horizon of 90 days Sendas Distribuidora SA is expected to generate 1.52 times more return on investment than Walmart. However, Sendas Distribuidora is 1.52 times more volatile than Walmart. It trades about 0.13 of its potential returns per unit of risk. Walmart is currently generating about -0.05 per unit of risk. If you would invest  447.00  in Sendas Distribuidora SA on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Sendas Distribuidora SA or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	14.52%
Values	Daily Returns

Sendas Distribuidora SA  vs.  Walmart

Sendas Distribuidora

Risk-Adjusted Performance

OK

Over the last 90 days Sendas Distribuidora SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, Sendas Distribuidora demonstrated 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. In spite of comparatively stable primary 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 Sendas Distribuidora and Walmart

The main advantage of trading using opposite Sendas Distribuidora and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sendas Distribuidora 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 Sendas Distribuidora SA 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.