Correlation Between Weis Markets and Walmart

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

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

Diversification Opportunities for Weis Markets and Walmart

-0.37

Correlation Coefficient

Weis Markets  Walmart

Very good diversification

The 3 months correlation between Weis and Walmart is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Weis Markets and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Weis Markets 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 Weis Markets 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 Weis Markets i.e., Weis Markets and Walmart go up and down completely randomly.

Pair Corralation between Weis Markets and Walmart

Considering the 90-day investment horizon Weis Markets is expected to generate 1.01 times more return on investment than Walmart. However, Weis Markets is 1.01 times more volatile than Walmart. It trades about 0.15 of its potential returns per unit of risk. Walmart is currently generating about -0.04 per unit of risk. If you would invest  6,718  in Weis Markets on December 28, 2024 and sell it today you would earn a total of  1,063  from holding Weis Markets or generate 15.82% return on investment over 90 days.

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

Weis Markets  vs.  Walmart

Weis Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weis Markets are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, Weis Markets disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 Weis Markets and Walmart

The main advantage of trading using opposite Weis Markets and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weis Markets 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 Weis Markets 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.