Correlation Between Walmart and Ternium SA

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

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

Diversification Opportunities for Walmart and Ternium SA

-0.58

Correlation Coefficient

Walmart  Ternium SA

Excellent diversification

The 3 months correlation between Walmart and Ternium is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ternium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA has no effect on the direction of Walmart i.e., Walmart and Ternium SA go up and down completely randomly.

Pair Corralation between Walmart and Ternium SA

Assuming the 90 days trading horizon Walmart is expected to generate 0.78 times more return on investment than Ternium SA. However, Walmart is 1.29 times less risky than Ternium SA. It trades about 0.04 of its potential returns per unit of risk. Ternium SA is currently generating about -0.16 per unit of risk. If you would invest  191,370  in Walmart on October 15, 2024 and sell it today you would earn a total of  1,730  from holding Walmart or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Walmart  vs.  Ternium SA

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) 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.

Ternium SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ternium SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walmart and Ternium SA

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

The idea behind Walmart and Ternium SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.