Correlation Between Walmart and Fortis 1St

Can any of the company-specific risk be diversified away by investing in both Walmart and Fortis 1St 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 Fortis 1St 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 Fortis 1St Cum, you can compare the effects of market volatilities on Walmart and Fortis 1St 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 Fortis 1St. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fortis 1St.

Diversification Opportunities for Walmart and Fortis 1St

-0.73

Correlation Coefficient

Walmart  Fortis 1St

Pay attention - limited upside

The 3 months correlation between Walmart and Fortis is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Fortis 1St Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis 1St Cum 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 Fortis 1St. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis 1St Cum has no effect on the direction of Walmart i.e., Walmart and Fortis 1St go up and down completely randomly.

Pair Corralation between Walmart and Fortis 1St

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.87 times more return on investment than Fortis 1St. However, Walmart is 1.87 times more volatile than Fortis 1St Cum. It trades about 0.28 of its potential returns per unit of risk. Fortis 1St Cum is currently generating about -0.08 per unit of risk. If you would invest  3,368  in Walmart Inc CDR on September 4, 2024 and sell it today you would earn a total of  700.00  from holding Walmart Inc CDR or generate 20.78% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Fortis 1St Cum

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.

Fortis 1St Cum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortis 1St Cum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fortis 1St is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Fortis 1St

The main advantage of trading using opposite Walmart and Fortis 1St positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Fortis 1St 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 Fortis 1St will offset losses from the drop in Fortis 1St's long position.

The idea behind Walmart Inc CDR and Fortis 1St Cum 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.