Correlation Between Under Armour and WALMART

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

By analyzing existing cross correlation between Under Armour C and WALMART INC, you can compare the effects of market volatilities on Under Armour 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 Under Armour with a short position of WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Under Armour and WALMART.

Diversification Opportunities for Under Armour and WALMART

0.36

Correlation Coefficient

Under Armour  WALMART

Weak diversification

The 3 months correlation between Under and WALMART is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Under Armour C and WALMART INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC and Under Armour 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 Under Armour C 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 has no effect on the direction of Under Armour i.e., Under Armour and WALMART go up and down completely randomly.

Pair Corralation between Under Armour and WALMART

Allowing for the 90-day total investment horizon Under Armour C is expected to under-perform the WALMART. In addition to that, Under Armour is 5.78 times more volatile than WALMART INC. It trades about -0.16 of its total potential returns per unit of risk. WALMART INC is currently generating about -0.09 per unit of volatility. If you would invest  9,808  in WALMART INC on December 30, 2024 and sell it today you would lose (177.00) from holding WALMART INC or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Under Armour C  vs.  WALMART INC

Under Armour C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Under Armour C has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

WALMART INC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Under Armour and WALMART

The main advantage of trading using opposite Under Armour and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Under Armour 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 Under Armour C and WALMART INC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.