Correlation Between Japan Real and Walmart

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

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

Diversification Opportunities for Japan Real and Walmart

0.37

Correlation Coefficient

Japan Real  Walmart

Weak diversification

The 3 months correlation between Japan and Walmart is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Japan Real Estate and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Japan Real 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 Japan Real Estate 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 Japan Real i.e., Japan Real and Walmart go up and down completely randomly.

Pair Corralation between Japan Real and Walmart

Assuming the 90 days horizon Japan Real Estate is expected to generate 0.8 times more return on investment than Walmart. However, Japan Real Estate is 1.25 times less risky than Walmart. It trades about 0.09 of its potential returns per unit of risk. Walmart is currently generating about -0.07 per unit of risk. If you would invest  62,590  in Japan Real Estate on December 29, 2024 and sell it today you would earn a total of  4,401  from holding Japan Real Estate or generate 7.03% return on investment over 90 days.

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

Japan Real Estate  vs.  Walmart

Japan Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Walmart

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Japan Real and Walmart

The main advantage of trading using opposite Japan Real and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Real 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 Japan Real Estate 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.