Correlation Between Grupo Profuturo and Walmart

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

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

Diversification Opportunities for Grupo Profuturo and Walmart

0.38

Correlation Coefficient

Grupo Profuturo  Walmart

Weak diversification

The 3 months correlation between Grupo and Walmart is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Profuturo SAB and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grupo Profuturo 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 Profuturo SAB 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 Profuturo i.e., Grupo Profuturo and Walmart go up and down completely randomly.

Pair Corralation between Grupo Profuturo and Walmart

Assuming the 90 days trading horizon Grupo Profuturo is expected to generate 3.48 times less return on investment than Walmart. But when comparing it to its historical volatility, Grupo Profuturo SAB is 1.01 times less risky than Walmart. It trades about 0.07 of its potential returns per unit of risk. Walmart is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  87,914  in Walmart on September 24, 2024 and sell it today you would earn a total of  97,086  from holding Walmart or generate 110.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Grupo Profuturo SAB  vs.  Walmart

Grupo Profuturo SAB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Profuturo SAB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grupo Profuturo is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) 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 Profuturo and Walmart

The main advantage of trading using opposite Grupo Profuturo and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Profuturo 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 Profuturo SAB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.