Correlation Between Fevertree Drinks and WALMART

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

By analyzing existing cross correlation between Fevertree Drinks Plc and WALMART INC 62, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and WALMART.

Diversification Opportunities for Fevertree Drinks and WALMART

0.51

Correlation Coefficient

Fevertree Drinks  WALMART

Very weak diversification

The 3 months correlation between Fevertree and WALMART is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and WALMART INC 62 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 62 and Fevertree Drinks 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 Fevertree Drinks Plc 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 INC 62 has no effect on the direction of Fevertree Drinks i.e., Fevertree Drinks and WALMART go up and down completely randomly.

Pair Corralation between Fevertree Drinks and WALMART

Assuming the 90 days horizon Fevertree Drinks Plc is expected to under-perform the WALMART. In addition to that, Fevertree Drinks is 4.56 times more volatile than WALMART INC 62. It trades about -0.01 of its total potential returns per unit of risk. WALMART INC 62 is currently generating about 0.01 per unit of volatility. If you would invest  11,359  in WALMART INC 62 on December 2, 2024 and sell it today you would earn a total of  56.00  from holding WALMART INC 62 or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Fevertree Drinks Plc  vs.  WALMART INC 62

Fevertree Drinks Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fevertree Drinks Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fevertree Drinks is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WALMART INC 62

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WALMART INC 62 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fevertree Drinks and WALMART

The main advantage of trading using opposite Fevertree Drinks and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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 Fevertree Drinks Plc and WALMART INC 62 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 Transaction History module to view history of all your transactions and understand their impact on performance.