Correlation Between Walmart and Gfl Environmental

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

Diversification Opportunities for Walmart and Gfl Environmental

0.71

Correlation Coefficient

Walmart  Gfl Environmental

Poor diversification

The 3 months correlation between Walmart and Gfl is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Gfl Environmental Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfl Environmental 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 Gfl Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfl Environmental has no effect on the direction of Walmart i.e., Walmart and Gfl Environmental go up and down completely randomly.

Pair Corralation between Walmart and Gfl Environmental

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.81 times more return on investment than Gfl Environmental. However, Walmart Inc CDR is 1.23 times less risky than Gfl Environmental. It trades about 0.18 of its potential returns per unit of risk. Gfl Environmental Holdings is currently generating about 0.12 per unit of risk. If you would invest  3,071  in Walmart Inc CDR on October 8, 2024 and sell it today you would earn a total of  870.00  from holding Walmart Inc CDR or generate 28.33% 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.  Gfl Environmental Holdings

Walmart Inc CDR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 15 (%) 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.

Gfl Environmental

Risk-Adjusted Performance

14 of 100

Good

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

Pair Trading with Walmart and Gfl Environmental

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

The idea behind Walmart Inc CDR and Gfl Environmental Holdings 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.