Correlation Between FORWARD AIR and Wal Mart

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

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

Diversification Opportunities for FORWARD AIR and Wal Mart

0.7

Correlation Coefficient

FORWARD AIR  Wal Mart

Poor diversification

The 3 months correlation between FORWARD and Wal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P 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 FORWARD AIR 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 FORWARD AIR P 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 FORWARD AIR i.e., FORWARD AIR and Wal Mart go up and down completely randomly.

Pair Corralation between FORWARD AIR and Wal Mart

Assuming the 90 days horizon FORWARD AIR P is expected to under-perform the Wal Mart. In addition to that, FORWARD AIR is 1.34 times more volatile than Wal Mart de Mxico. It trades about -0.15 of its total potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.01 per unit of volatility. If you would invest  258.00  in Wal Mart de Mxico on December 30, 2024 and sell it today you would lose (2.00) from holding Wal Mart de Mxico or give up 0.78% of portfolio value over 90 days.

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

FORWARD AIR P  vs.  Wal Mart de Mxico

FORWARD AIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wal Mart de

Risk-Adjusted Performance

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 nearly stable basic indicators, Wal Mart is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORWARD AIR and Wal Mart

The main advantage of trading using opposite FORWARD AIR and Wal Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR 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 FORWARD AIR P 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 CEOs Directory module to screen CEOs from public companies around the world.