Correlation Between Walmart and Fibra Plus

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

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

Diversification Opportunities for Walmart and Fibra Plus

0.01

Correlation Coefficient

Walmart  Fibra Plus

Significant diversification

The 3 months correlation between Walmart and Fibra is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fibra Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fibra Plus 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 Fibra Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fibra Plus has no effect on the direction of Walmart i.e., Walmart and Fibra Plus go up and down completely randomly.

Pair Corralation between Walmart and Fibra Plus

Assuming the 90 days trading horizon Walmart is expected to generate 0.38 times more return on investment than Fibra Plus. However, Walmart is 2.63 times less risky than Fibra Plus. It trades about 0.23 of its potential returns per unit of risk. Fibra Plus is currently generating about 0.05 per unit of risk. If you would invest  155,657  in Walmart on October 10, 2024 and sell it today you would earn a total of  29,243  from holding Walmart or generate 18.79% return on investment over 90 days.

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

Walmart  vs.  Fibra Plus

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Fibra Plus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fibra Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fibra Plus may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walmart and Fibra Plus

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

The idea behind Walmart and Fibra Plus 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.