Correlation Between WALMART and CNA Financial

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

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

Diversification Opportunities for WALMART and CNA Financial

0.17

Correlation Coefficient

WALMART  CNA Financial

Average diversification

The 3 months correlation between WALMART and CNA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding WALMART INC and CNA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNA Financial and WALMART 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 WALMART INC are associated (or correlated) with CNA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNA Financial has no effect on the direction of WALMART i.e., WALMART and CNA Financial go up and down completely randomly.

Pair Corralation between WALMART and CNA Financial

Assuming the 90 days trading horizon WALMART INC is expected to generate 0.47 times more return on investment than CNA Financial. However, WALMART INC is 2.11 times less risky than CNA Financial. It trades about 0.02 of its potential returns per unit of risk. CNA Financial is currently generating about 0.0 per unit of risk. If you would invest  9,813  in WALMART INC on October 24, 2024 and sell it today you would earn a total of  73.00  from holding WALMART INC or generate 0.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

WALMART INC  vs.  CNA Financial

WALMART INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WALMART INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CNA Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with WALMART and CNA Financial

The main advantage of trading using opposite WALMART and CNA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WALMART position performs unexpectedly, CNA Financial 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 CNA Financial will offset losses from the drop in CNA Financial's long position.

The idea behind WALMART INC and CNA Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..