Correlation Between Walmart and Choice Properties

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

Diversification Opportunities for Walmart and Choice Properties

-0.3

Correlation Coefficient

Walmart  Choice Properties

Very good diversification

The 3 months correlation between Walmart and Choice is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real 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 Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Walmart i.e., Walmart and Choice Properties go up and down completely randomly.

Pair Corralation between Walmart and Choice Properties

Assuming the 90 days trading horizon Walmart Inc CDR is expected to under-perform the Choice Properties. In addition to that, Walmart is 2.03 times more volatile than Choice Properties Real. It trades about -0.04 of its total potential returns per unit of risk. Choice Properties Real is currently generating about 0.08 per unit of volatility. If you would invest  1,331  in Choice Properties Real on December 29, 2024 and sell it today you would earn a total of  65.00  from holding Choice Properties Real or generate 4.88% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Choice Properties Real

Walmart Inc CDR

Risk-Adjusted Performance

Very Weak

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

Choice Properties Real

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Choice Properties Real are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Choice Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Choice Properties

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

The idea behind Walmart Inc CDR and Choice Properties Real 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.