Correlation Between Walmart and Strer SE

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

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

Diversification Opportunities for Walmart and Strer SE

-0.82

Correlation Coefficient

Walmart  Strer SE

Pay attention - limited upside

The 3 months correlation between Walmart and Strer is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Strer SE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strer SE 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 Strer SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strer SE has no effect on the direction of Walmart i.e., Walmart and Strer SE go up and down completely randomly.

Pair Corralation between Walmart and Strer SE

Assuming the 90 days horizon Walmart is expected to generate 0.7 times more return on investment than Strer SE. However, Walmart is 1.43 times less risky than Strer SE. It trades about 0.14 of its potential returns per unit of risk. Strer SE Co is currently generating about 0.03 per unit of risk. If you would invest  4,175  in Walmart on October 14, 2024 and sell it today you would earn a total of  4,943  from holding Walmart or generate 118.4% return on investment over 90 days.

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

Walmart  vs.  Strer SE Co

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) 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.

Strer SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strer SE Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Strer SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and Strer SE

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

The idea behind Walmart and Strer SE Co 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 Anywhere module to track or share privately all of your investments from the convenience of any device.