Correlation Between Grupo Industrial and Walmart

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

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

Diversification Opportunities for Grupo Industrial and Walmart

-0.53

Correlation Coefficient

Grupo Industrial  Walmart

Excellent diversification

The 3 months correlation between Grupo and Walmart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Industrial Saltillo and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grupo Industrial 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 Grupo Industrial Saltillo 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 Grupo Industrial i.e., Grupo Industrial and Walmart go up and down completely randomly.

Pair Corralation between Grupo Industrial and Walmart

Assuming the 90 days trading horizon Grupo Industrial Saltillo is expected to generate 0.76 times more return on investment than Walmart. However, Grupo Industrial Saltillo is 1.32 times less risky than Walmart. It trades about 0.0 of its potential returns per unit of risk. Walmart is currently generating about -0.09 per unit of risk. If you would invest  1,706  in Grupo Industrial Saltillo on October 11, 2024 and sell it today you would lose (1.00) from holding Grupo Industrial Saltillo or give up 0.06% of portfolio value over 90 days.

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

Grupo Industrial Saltillo  vs.  Walmart

Grupo Industrial Saltillo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Industrial Saltillo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Industrial and Walmart

The main advantage of trading using opposite Grupo Industrial and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Industrial 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 Grupo Industrial Saltillo 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.