Correlation Between United Guardian and Walmart

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

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

Diversification Opportunities for United Guardian and Walmart

0.74

Correlation Coefficient

United Guardian  Walmart

Poor diversification

The 3 months correlation between United and Walmart is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Walmart go up and down completely randomly.

Pair Corralation between United Guardian and Walmart

Allowing for the 90-day total investment horizon United Guardian is expected to generate 1.18 times more return on investment than Walmart. However, United Guardian is 1.18 times more volatile than Walmart. It trades about 0.0 of its potential returns per unit of risk. Walmart is currently generating about -0.04 per unit of risk. If you would invest  927.00  in United Guardian on December 28, 2024 and sell it today you would lose (7.00) from holding United Guardian or give up 0.76% of portfolio value over 90 days.

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

United Guardian  vs.  Walmart

United Guardian

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, United Guardian is not utilizing all of its potentials. The latest 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. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with United Guardian and Walmart

The main advantage of trading using opposite United Guardian and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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 United Guardian 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.