Correlation Between Walmart and Bridgemarq Real

Can any of the company-specific risk be diversified away by investing in both Walmart and Bridgemarq Real 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 Bridgemarq Real 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 Bridgemarq Real Estate, you can compare the effects of market volatilities on Walmart and Bridgemarq Real 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 Bridgemarq Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Bridgemarq Real.

Diversification Opportunities for Walmart and Bridgemarq Real

0.63

Correlation Coefficient

Walmart  Bridgemarq Real

Poor diversification

The 3 months correlation between Walmart and Bridgemarq is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Bridgemarq Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgemarq Real Estate 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 Bridgemarq Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgemarq Real Estate has no effect on the direction of Walmart i.e., Walmart and Bridgemarq Real go up and down completely randomly.

Pair Corralation between Walmart and Bridgemarq Real

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.89 times more return on investment than Bridgemarq Real. However, Walmart Inc CDR is 1.12 times less risky than Bridgemarq Real. It trades about 0.21 of its potential returns per unit of risk. Bridgemarq Real Estate is currently generating about 0.16 per unit of risk. If you would invest  2,965  in Walmart Inc CDR on September 29, 2024 and sell it today you would earn a total of  1,015  from holding Walmart Inc CDR or generate 34.23% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Bridgemarq Real Estate

Walmart Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Bridgemarq Real Estate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgemarq Real Estate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Bridgemarq Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walmart and Bridgemarq Real

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

The idea behind Walmart Inc CDR and Bridgemarq Real Estate 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.