Correlation Between Tesla and Walmart

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

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

Diversification Opportunities for Tesla and Walmart

0.46

Correlation Coefficient

Tesla  Walmart

Very weak diversification

The 3 months correlation between Tesla and Walmart is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR 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 Tesla 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 Tesla Inc CDR 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 Tesla i.e., Tesla and Walmart go up and down completely randomly.

Pair Corralation between Tesla and Walmart

Assuming the 90 days trading horizon Tesla Inc CDR is expected to under-perform the Walmart. In addition to that, Tesla is 2.38 times more volatile than Walmart Inc CDR. It trades about -0.13 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about -0.04 per unit of volatility. If you would invest  3,919  in Walmart Inc CDR on December 30, 2024 and sell it today you would lose (246.00) from holding Walmart Inc CDR or give up 6.28% of portfolio value over 90 days.

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

Tesla Inc CDR  vs.  Walmart Inc CDR

Tesla Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Walmart Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Walmart is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tesla and Walmart

The main advantage of trading using opposite Tesla and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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 Tesla Inc CDR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.