Correlation Between Sabio Holdings and Walmart

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

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

Diversification Opportunities for Sabio Holdings and Walmart

-0.25

Correlation Coefficient

Sabio Holdings  Walmart

Very good diversification

The 3 months correlation between Sabio and Walmart is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sabio Holdings 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 Sabio Holdings 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 Sabio Holdings 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 Sabio Holdings i.e., Sabio Holdings and Walmart go up and down completely randomly.

Pair Corralation between Sabio Holdings and Walmart

Assuming the 90 days trading horizon Sabio Holdings is expected to generate 4.73 times more return on investment than Walmart. However, Sabio Holdings is 4.73 times more volatile than Walmart Inc CDR. It trades about 0.09 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.22 per unit of risk. If you would invest  26.00  in Sabio Holdings on September 24, 2024 and sell it today you would earn a total of  22.00  from holding Sabio Holdings or generate 84.62% return on investment over 90 days.

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

Sabio Holdings  vs.  Walmart Inc CDR

Sabio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sabio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Sabio Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 uncertain basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sabio Holdings and Walmart

The main advantage of trading using opposite Sabio Holdings and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabio Holdings 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 Sabio Holdings 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.