Correlation Between Walmart and Firan Technology

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

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

Diversification Opportunities for Walmart and Firan Technology

0.75

Correlation Coefficient

Walmart  Firan Technology

Poor diversification

The 3 months correlation between Walmart and Firan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Firan Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firan Technology 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 Firan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firan Technology has no effect on the direction of Walmart i.e., Walmart and Firan Technology go up and down completely randomly.

Pair Corralation between Walmart and Firan Technology

Assuming the 90 days horizon Walmart is expected to generate 1.04 times less return on investment than Firan Technology. But when comparing it to its historical volatility, Walmart is 1.75 times less risky than Firan Technology. It trades about 0.29 of its potential returns per unit of risk. Firan Technology Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  396.00  in Firan Technology Group on October 8, 2024 and sell it today you would earn a total of  88.00  from holding Firan Technology Group or generate 22.22% return on investment over 90 days.

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

Walmart  vs.  Firan Technology Group

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 uncertain basic indicators, Walmart reported solid returns over the last few months and may actually be approaching a breakup point.

Firan Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Firan Technology Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Firan Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Firan Technology

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

The idea behind Walmart and Firan Technology Group 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.