Correlation Between Walmart and Alithya Group

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

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

Diversification Opportunities for Walmart and Alithya Group

-0.51

Correlation Coefficient

Walmart  Alithya Group

Excellent diversification

The 3 months correlation between Walmart and Alithya is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Alithya Group inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alithya Group inc 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 Inc CDR are associated (or correlated) with Alithya Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alithya Group inc has no effect on the direction of Walmart i.e., Walmart and Alithya Group go up and down completely randomly.

Pair Corralation between Walmart and Alithya Group

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.5 times more return on investment than Alithya Group. However, Walmart Inc CDR is 2.0 times less risky than Alithya Group. It trades about 0.27 of its potential returns per unit of risk. Alithya Group inc is currently generating about -0.04 per unit of risk. If you would invest  3,369  in Walmart Inc CDR on September 3, 2024 and sell it today you would earn a total of  668.00  from holding Walmart Inc CDR or generate 19.83% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Alithya Group inc

Walmart Inc CDR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Alithya Group inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alithya Group inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Alithya Group is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Alithya Group

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

The idea behind Walmart Inc CDR and Alithya Group inc 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.