Correlation Between Walmart and First Capital
Can any of the company-specific risk be diversified away by investing in both Walmart and First Capital 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 First Capital 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 First Capital Real, you can compare the effects of market volatilities on Walmart and First Capital 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 First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and First Capital.
Diversification Opportunities for Walmart and First Capital
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and First is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and First Capital Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital 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 First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Real has no effect on the direction of Walmart i.e., Walmart and First Capital go up and down completely randomly.
Pair Corralation between Walmart and First Capital
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.29 times more return on investment than First Capital. However, Walmart is 1.29 times more volatile than First Capital Real. It trades about 0.28 of its potential returns per unit of risk. First Capital Real is currently generating about 0.01 per unit of risk. If you would invest 3,359 in Walmart Inc CDR on September 5, 2024 and sell it today you would earn a total of 709.00 from holding Walmart Inc CDR or generate 21.11% 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. First Capital Real
Performance |
Timeline |
Walmart Inc CDR |
First Capital Real |
Walmart and First Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and First Capital
The main advantage of trading using opposite Walmart and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital's long position.Walmart vs. Converge Technology Solutions | Walmart vs. Western Investment | Walmart vs. Renoworks Software | Walmart vs. Algoma Steel Group |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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