Correlation Between Wal Mart and Ollies Bargain

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

By analyzing existing cross correlation between Wal Mart de and Ollies Bargain Outlet, you can compare the effects of market volatilities on Wal Mart and Ollies Bargain 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 Ollies Bargain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and Ollies Bargain.

Diversification Opportunities for Wal Mart and Ollies Bargain

-0.01

Correlation Coefficient

Wal Mart  Ollies Bargain

Good diversification

The 3 months correlation between Wal and Ollies is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de and Ollies Bargain Outlet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ollies Bargain Outlet 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 are associated (or correlated) with Ollies Bargain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ollies Bargain Outlet has no effect on the direction of Wal Mart i.e., Wal Mart and Ollies Bargain go up and down completely randomly.

Pair Corralation between Wal Mart and Ollies Bargain

Assuming the 90 days horizon Wal Mart de is expected to generate 0.9 times more return on investment than Ollies Bargain. However, Wal Mart de is 1.11 times less risky than Ollies Bargain. It trades about 0.05 of its potential returns per unit of risk. Ollies Bargain Outlet is currently generating about -0.01 per unit of risk. If you would invest  272.00  in Wal Mart de on December 27, 2024 and sell it today you would earn a total of  18.00  from holding Wal Mart de or generate 6.62% return on investment over 90 days.

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

Wal Mart de  vs.  Ollies Bargain Outlet

Wal Mart de

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Wal Mart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ollies Bargain Outlet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ollies Bargain Outlet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Ollies Bargain is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wal Mart and Ollies Bargain

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

The idea behind Wal Mart de and Ollies Bargain Outlet 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.