Correlation Between NISSIN FOODS and Walmart

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

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

Diversification Opportunities for NISSIN FOODS and Walmart

-0.1

Correlation Coefficient

NISSIN FOODS  Walmart

Good diversification

The 3 months correlation between NISSIN and Walmart is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NISSIN FOODS HLDGS and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and NISSIN FOODS 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 NISSIN FOODS HLDGS 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 NISSIN FOODS i.e., NISSIN FOODS and Walmart go up and down completely randomly.

Pair Corralation between NISSIN FOODS and Walmart

Assuming the 90 days trading horizon NISSIN FOODS is expected to generate 27.18 times less return on investment than Walmart. In addition to that, NISSIN FOODS is 1.37 times more volatile than Walmart. It trades about 0.0 of its total potential returns per unit of risk. Walmart is currently generating about 0.16 per unit of volatility. If you would invest  4,756  in Walmart on September 12, 2024 and sell it today you would earn a total of  4,118  from holding Walmart or generate 86.59% return on investment over 90 days.

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

NISSIN FOODS HLDGS  vs.  Walmart

NISSIN FOODS HLDGS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NISSIN FOODS HLDGS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NISSIN FOODS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Walmart

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Walmart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NISSIN FOODS and Walmart

The main advantage of trading using opposite NISSIN FOODS and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSIN FOODS 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 NISSIN FOODS HLDGS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.