Correlation Between Walmart and CCL Industries

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

Diversification Opportunities for Walmart and CCL Industries

-0.77

Correlation Coefficient

Walmart  CCL Industries

Pay attention - limited upside

The 3 months correlation between Walmart and CCL is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Walmart i.e., Walmart and CCL Industries go up and down completely randomly.

Pair Corralation between Walmart and CCL Industries

Assuming the 90 days trading horizon Walmart Inc CDR is expected to under-perform the CCL Industries. In addition to that, Walmart is 1.15 times more volatile than CCL Industries. It trades about -0.22 of its total potential returns per unit of risk. CCL Industries is currently generating about -0.24 per unit of volatility. If you would invest  7,799  in CCL Industries on October 6, 2024 and sell it today you would lose (342.00) from holding CCL Industries or give up 4.39% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  CCL Industries

Walmart Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 16 (%) 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.

CCL Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Walmart and CCL Industries

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

The idea behind Walmart Inc CDR and CCL Industries 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.