Correlation Between Solid Impact and Walmart

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

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

Diversification Opportunities for Solid Impact and Walmart

0.0

Correlation Coefficient

Solid Impact  Walmart

Pay attention - limited upside

The 3 months correlation between Solid and Walmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solid Impact Investments 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 Solid Impact 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 Solid Impact Investments 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 Solid Impact i.e., Solid Impact and Walmart go up and down completely randomly.

Pair Corralation between Solid Impact and Walmart

Assuming the 90 days trading horizon Solid Impact Investments is expected to under-perform the Walmart. In addition to that, Solid Impact is 2.74 times more volatile than Walmart Inc CDR. It trades about -0.06 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.12 per unit of volatility. If you would invest  2,112  in Walmart Inc CDR on October 4, 2024 and sell it today you would earn a total of  1,813  from holding Walmart Inc CDR or generate 85.84% return on investment over 90 days.

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

Solid Impact Investments  vs.  Walmart Inc CDR

Solid Impact Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Walmart Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Solid Impact and Walmart

The main advantage of trading using opposite Solid Impact and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Impact 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 Solid Impact Investments 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.