Correlation Between Walmart and ASX

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

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

Diversification Opportunities for Walmart and ASX

0.2

Correlation Coefficient

Walmart  ASX

Modest diversification

The 3 months correlation between Walmart and ASX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ASX LTD UNSPONSADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX LTD UNSPONSADR 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 ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX LTD UNSPONSADR has no effect on the direction of Walmart i.e., Walmart and ASX go up and down completely randomly.

Pair Corralation between Walmart and ASX

Assuming the 90 days horizon Walmart is expected to under-perform the ASX. In addition to that, Walmart is 1.14 times more volatile than ASX LTD UNSPONSADR. It trades about -0.06 of its total potential returns per unit of risk. ASX LTD UNSPONSADR is currently generating about -0.04 per unit of volatility. If you would invest  3,834  in ASX LTD UNSPONSADR on December 26, 2024 and sell it today you would lose (154.00) from holding ASX LTD UNSPONSADR or give up 4.02% of portfolio value over 90 days.

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

Walmart  vs.  ASX LTD UNSPONSADR

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ASX LTD UNSPONSADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASX LTD UNSPONSADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ASX 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 ASX

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

The idea behind Walmart and ASX LTD UNSPONSADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.