Correlation Between Fras Le and Walmart

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

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

Diversification Opportunities for Fras Le and Walmart

0.15

Correlation Coefficient

Fras Le  Walmart

Average diversification

The 3 months correlation between Fras and Walmart is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Fras Le 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 Fras le 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 Fras Le i.e., Fras Le and Walmart go up and down completely randomly.

Pair Corralation between Fras Le and Walmart

Assuming the 90 days trading horizon Fras le SA is expected to generate 0.73 times more return on investment than Walmart. However, Fras le SA is 1.38 times less risky than Walmart. It trades about 0.21 of its potential returns per unit of risk. Walmart is currently generating about 0.01 per unit of risk. If you would invest  2,039  in Fras le SA on December 4, 2024 and sell it today you would earn a total of  338.00  from holding Fras le SA or generate 16.58% return on investment over 90 days.

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

Fras le SA  vs.  Walmart

Fras le SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fras le SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fras Le unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential 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 Fras Le and Walmart

The main advantage of trading using opposite Fras Le and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le 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 Fras le 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.