Correlation Between Banco Del and Wal Mart

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

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

Diversification Opportunities for Banco Del and Wal Mart

0.48

Correlation Coefficient

Banco Del  Wal Mart

Very weak diversification

The 3 months correlation between Banco and Wal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Banco del Bajo 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 Banco Del 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 Banco del Bajo 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 Banco Del i.e., Banco Del and Wal Mart go up and down completely randomly.

Pair Corralation between Banco Del and Wal Mart

Assuming the 90 days trading horizon Banco Del is expected to generate 1.49 times less return on investment than Wal Mart. But when comparing it to its historical volatility, Banco del Bajo is 1.73 times less risky than Wal Mart. It trades about 0.01 of its potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,701  in Wal Mart de Mxico on October 11, 2024 and sell it today you would lose (5.00) from holding Wal Mart de Mxico or give up 0.09% of portfolio value over 90 days.

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

Banco del Bajo  vs.  Wal Mart de Mxico

Banco del Bajo

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Banco del Bajo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward-looking indicators, Banco Del is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Wal Mart de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wal Mart de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Wal Mart is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banco Del and Wal Mart

The main advantage of trading using opposite Banco Del and Wal Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Del 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 Banco del Bajo 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.