Correlation Between Walmart and Highwood Asset

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

Diversification Opportunities for Walmart and Highwood Asset

-0.28

Correlation Coefficient

Walmart  Highwood Asset

Very good diversification

The 3 months correlation between Walmart and Highwood is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management 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 Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of Walmart i.e., Walmart and Highwood Asset go up and down completely randomly.

Pair Corralation between Walmart and Highwood Asset

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.64 times more return on investment than Highwood Asset. However, Walmart Inc CDR is 1.55 times less risky than Highwood Asset. It trades about 0.01 of its potential returns per unit of risk. Highwood Asset Management is currently generating about -0.02 per unit of risk. If you would invest  4,275  in Walmart Inc CDR on December 1, 2024 and sell it today you would lose (4.00) from holding Walmart Inc CDR or give up 0.09% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  Highwood Asset Management

Walmart Inc CDR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Highwood Asset Management

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and Highwood Asset

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

The idea behind Walmart Inc CDR and Highwood Asset Management 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.