Correlation Between Wal Mart and Becle SAB

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

By analyzing existing cross correlation between Wal Mart de Mxico and Becle SAB de, you can compare the effects of market volatilities on Wal Mart and Becle SAB 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 Wal Mart with a short position of Becle SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and Becle SAB.

Diversification Opportunities for Wal Mart and Becle SAB

0.13

Correlation Coefficient

Wal Mart  Becle SAB

Average diversification

The 3 months correlation between Wal and Becle is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and Becle SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Becle SAB de and Wal Mart 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 Wal Mart de Mxico are associated (or correlated) with Becle SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Becle SAB de has no effect on the direction of Wal Mart i.e., Wal Mart and Becle SAB go up and down completely randomly.

Pair Corralation between Wal Mart and Becle SAB

Assuming the 90 days trading horizon Wal Mart de Mxico is expected to generate 0.6 times more return on investment than Becle SAB. However, Wal Mart de Mxico is 1.66 times less risky than Becle SAB. It trades about 0.01 of its potential returns per unit of risk. Becle SAB de is currently generating about -0.16 per unit of risk. If you would invest  5,637  in Wal Mart de Mxico on December 22, 2024 and sell it today you would lose (20.00) from holding Wal Mart de Mxico or give up 0.35% of portfolio value over 90 days.

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

Wal Mart de Mxico  vs.  Becle SAB de

Wal Mart de

Risk-Adjusted Performance

Very Weak

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

Becle SAB de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Becle SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Wal Mart and Becle SAB

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

The idea behind Wal Mart de Mxico and Becle SAB de 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.