Correlation Between Walmart and NIKKON HOLDINGS

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

By analyzing existing cross correlation between Walmart and NIKKON HOLDINGS TD, you can compare the effects of market volatilities on Walmart and NIKKON HOLDINGS 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 NIKKON HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and NIKKON HOLDINGS.

Diversification Opportunities for Walmart and NIKKON HOLDINGS

0.85

Correlation Coefficient

Walmart  NIKKON HOLDINGS

Very poor diversification

The 3 months correlation between Walmart and NIKKON is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and NIKKON HOLDINGS TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKKON HOLDINGS TD 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 are associated (or correlated) with NIKKON HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKKON HOLDINGS TD has no effect on the direction of Walmart i.e., Walmart and NIKKON HOLDINGS go up and down completely randomly.

Pair Corralation between Walmart and NIKKON HOLDINGS

Assuming the 90 days horizon Walmart is expected to generate 0.82 times more return on investment than NIKKON HOLDINGS. However, Walmart is 1.22 times less risky than NIKKON HOLDINGS. It trades about 0.14 of its potential returns per unit of risk. NIKKON HOLDINGS TD is currently generating about 0.06 per unit of risk. If you would invest  4,157  in Walmart on October 11, 2024 and sell it today you would earn a total of  4,706  from holding Walmart or generate 113.21% return on investment over 90 days.

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

Walmart  vs.  NIKKON HOLDINGS TD

Walmart

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Walmart reported solid returns over the last few months and may actually be approaching a breakup point.

NIKKON HOLDINGS TD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NIKKON HOLDINGS TD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NIKKON HOLDINGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walmart and NIKKON HOLDINGS

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

The idea behind Walmart and NIKKON HOLDINGS TD 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.