Correlation Between Ollies Bargain and Walmart

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

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

Diversification Opportunities for Ollies Bargain and Walmart

0.05

Correlation Coefficient

Ollies Bargain  Walmart

Significant diversification

The 3 months correlation between Ollies and Walmart is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ollies Bargain Outlet and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Ollies Bargain 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 Ollies Bargain Outlet 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 Ollies Bargain i.e., Ollies Bargain and Walmart go up and down completely randomly.

Pair Corralation between Ollies Bargain and Walmart

Given the investment horizon of 90 days Ollies Bargain Outlet is expected to generate 1.59 times more return on investment than Walmart. However, Ollies Bargain is 1.59 times more volatile than Walmart. It trades about 0.03 of its potential returns per unit of risk. Walmart is currently generating about -0.05 per unit of risk. If you would invest  11,051  in Ollies Bargain Outlet on December 28, 2024 and sell it today you would earn a total of  273.00  from holding Ollies Bargain Outlet or generate 2.47% return on investment over 90 days.

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

Ollies Bargain Outlet  vs.  Walmart

Ollies Bargain Outlet

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ollies Bargain Outlet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Ollies Bargain is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ollies Bargain and Walmart

The main advantage of trading using opposite Ollies Bargain and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ollies Bargain 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 Ollies Bargain Outlet 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.