Correlation Between Walmart and Corporativo GBM

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

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

Diversification Opportunities for Walmart and Corporativo GBM

-0.93

Correlation Coefficient

Walmart  Corporativo GBM

Pay attention - limited upside

The 3 months correlation between Walmart and Corporativo is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Corporativo GBM SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporativo GBM SAB 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 Corporativo GBM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporativo GBM SAB has no effect on the direction of Walmart i.e., Walmart and Corporativo GBM go up and down completely randomly.

Pair Corralation between Walmart and Corporativo GBM

Assuming the 90 days trading horizon Walmart is expected to generate 1.29 times more return on investment than Corporativo GBM. However, Walmart is 1.29 times more volatile than Corporativo GBM SAB. It trades about 0.13 of its potential returns per unit of risk. Corporativo GBM SAB is currently generating about -0.04 per unit of risk. If you would invest  86,789  in Walmart on October 12, 2024 and sell it today you would earn a total of  106,311  from holding Walmart or generate 122.49% return on investment over 90 days.

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

Walmart  vs.  Corporativo GBM SAB

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Walmart showed solid returns over the last few months and may actually be approaching a breakup point.

Corporativo GBM SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corporativo GBM SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Walmart and Corporativo GBM

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

The idea behind Walmart and Corporativo GBM SAB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.