Correlation Between CHEMICAL INDUSTRIES and Walmart

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

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

Diversification Opportunities for CHEMICAL INDUSTRIES and Walmart

0.0

Correlation Coefficient

CHEMICAL INDUSTRIES  Walmart

Pay attention - limited upside

The 3 months correlation between CHEMICAL and Walmart is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHEMICAL INDUSTRIES and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES i.e., CHEMICAL INDUSTRIES and Walmart go up and down completely randomly.

Pair Corralation between CHEMICAL INDUSTRIES and Walmart

If you would invest  43.00  in CHEMICAL INDUSTRIES on December 22, 2024 and sell it today you would earn a total of  0.00  from holding CHEMICAL INDUSTRIES or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CHEMICAL INDUSTRIES  vs.  Walmart

CHEMICAL INDUSTRIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHEMICAL INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, CHEMICAL INDUSTRIES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHEMICAL INDUSTRIES and Walmart

The main advantage of trading using opposite CHEMICAL INDUSTRIES and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEMICAL INDUSTRIES 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 CHEMICAL INDUSTRIES 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.