Correlation Between CONAGRA FOODS and Walmart

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

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

Diversification Opportunities for CONAGRA FOODS and Walmart

-0.48

Correlation Coefficient

CONAGRA FOODS  Walmart

Very good diversification

The 3 months correlation between CONAGRA and Walmart is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and CONAGRA FOODS 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 CONAGRA FOODS 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 CONAGRA FOODS i.e., CONAGRA FOODS and Walmart go up and down completely randomly.

Pair Corralation between CONAGRA FOODS and Walmart

Assuming the 90 days trading horizon CONAGRA FOODS is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, CONAGRA FOODS is 1.05 times less risky than Walmart. The stock trades about -0.09 of its potential returns per unit of risk. The Walmart is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  7,635  in Walmart on October 23, 2024 and sell it today you would earn a total of  1,267  from holding Walmart or generate 16.59% return on investment over 90 days.

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

CONAGRA FOODS  vs.  Walmart

CONAGRA FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONAGRA FOODS and Walmart

The main advantage of trading using opposite CONAGRA FOODS and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS 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 CONAGRA FOODS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.