Correlation Between Walmart and Teradata Corp

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

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

Diversification Opportunities for Walmart and Teradata Corp

-0.4

Correlation Coefficient

Walmart  Teradata Corp

Very good diversification

The 3 months correlation between Walmart and Teradata is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Walmart i.e., Walmart and Teradata Corp go up and down completely randomly.

Pair Corralation between Walmart and Teradata Corp

Assuming the 90 days horizon Walmart is expected to generate 0.54 times more return on investment than Teradata Corp. However, Walmart is 1.86 times less risky than Teradata Corp. It trades about -0.09 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.35 per unit of risk. If you would invest  9,659  in Walmart on December 5, 2024 and sell it today you would lose (405.00) from holding Walmart or give up 4.19% of portfolio value over 90 days.

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

Walmart  vs.  Teradata Corp

Walmart

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Walmart is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Teradata Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Teradata Corp

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

The idea behind Walmart and Teradata Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.