Correlation Between Walmart and SOCKET MOBILE

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

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

Diversification Opportunities for Walmart and SOCKET MOBILE

0.49

Correlation Coefficient

Walmart  SOCKET MOBILE

Very weak diversification

The 3 months correlation between Walmart and SOCKET is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SOCKET MOBILE NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCKET MOBILE NEW 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 SOCKET MOBILE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCKET MOBILE NEW has no effect on the direction of Walmart i.e., Walmart and SOCKET MOBILE go up and down completely randomly.

Pair Corralation between Walmart and SOCKET MOBILE

Assuming the 90 days horizon Walmart is expected to generate 0.5 times more return on investment than SOCKET MOBILE. However, Walmart is 2.0 times less risky than SOCKET MOBILE. It trades about -0.07 of its potential returns per unit of risk. SOCKET MOBILE NEW is currently generating about -0.07 per unit of risk. If you would invest  8,629  in Walmart on December 22, 2024 and sell it today you would lose (669.00) from holding Walmart or give up 7.75% of portfolio value over 90 days.

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

Walmart  vs.  SOCKET MOBILE NEW

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.

SOCKET MOBILE NEW

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOCKET MOBILE NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental drivers 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 SOCKET MOBILE

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

The idea behind Walmart and SOCKET MOBILE NEW 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.