Correlation Between Therma Bright and Walmart

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

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

Diversification Opportunities for Therma Bright and Walmart

-0.8

Correlation Coefficient

Therma Bright  Walmart

Pay attention - limited upside

The 3 months correlation between Therma and Walmart is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright 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 Therma Bright 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 Therma Bright 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 Therma Bright i.e., Therma Bright and Walmart go up and down completely randomly.

Pair Corralation between Therma Bright and Walmart

Assuming the 90 days trading horizon Therma Bright is expected to under-perform the Walmart. In addition to that, Therma Bright is 10.79 times more volatile than Walmart Inc CDR. It trades about -0.09 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.25 per unit of volatility. If you would invest  3,479  in Walmart Inc CDR on September 12, 2024 and sell it today you would earn a total of  630.00  from holding Walmart Inc CDR or generate 18.11% return on investment over 90 days.

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

Therma Bright  vs.  Walmart Inc CDR

Therma Bright

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Therma Bright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Walmart Inc CDR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Therma Bright and Walmart

The main advantage of trading using opposite Therma Bright and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright 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 Therma Bright 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.