Correlation Between Transportadora and Walmart

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

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

Diversification Opportunities for Transportadora and Walmart

0.23

Correlation Coefficient

Transportadora  Walmart

Modest diversification

The 3 months correlation between Transportadora and Walmart is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Walmart go up and down completely randomly.

Pair Corralation between Transportadora and Walmart

Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 3.08 times more return on investment than Walmart. However, Transportadora is 3.08 times more volatile than Walmart. It trades about 0.0 of its potential returns per unit of risk. Walmart is currently generating about -0.09 per unit of risk. If you would invest  2,700  in Transportadora de Gas on December 30, 2024 and sell it today you would lose (260.00) from holding Transportadora de Gas or give up 9.63% of portfolio value over 90 days.

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

Transportadora de Gas  vs.  Walmart

Transportadora de Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transportadora de Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Transportadora is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Transportadora and Walmart

The main advantage of trading using opposite Transportadora and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.