Correlation Between Overactive Media and Walmart

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

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

Diversification Opportunities for Overactive Media and Walmart

0.21

Correlation Coefficient

Overactive Media  Walmart

Modest diversification

The 3 months correlation between Overactive and Walmart is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Overactive Media Corp and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Overactive Media 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 Overactive Media Corp 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 Inc CDR has no effect on the direction of Overactive Media i.e., Overactive Media and Walmart go up and down completely randomly.

Pair Corralation between Overactive Media and Walmart

Assuming the 90 days horizon Overactive Media Corp is expected to under-perform the Walmart. In addition to that, Overactive Media is 4.09 times more volatile than Walmart Inc CDR. It trades about -0.01 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.2 per unit of volatility. If you would invest  3,473  in Walmart Inc CDR on October 8, 2024 and sell it today you would earn a total of  468.00  from holding Walmart Inc CDR or generate 13.48% return on investment over 90 days.

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

Overactive Media Corp  vs.  Walmart Inc CDR

Overactive Media Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overactive Media Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Overactive Media is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Walmart Inc CDR

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Overactive Media and Walmart

The main advantage of trading using opposite Overactive Media and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overactive Media 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 Overactive Media Corp and Walmart Inc CDR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.