Correlation Between Walmart and Intact Financial

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

Diversification Opportunities for Walmart and Intact Financial

0.32

Correlation Coefficient

Walmart  Intact Financial

Weak diversification

The 3 months correlation between Walmart and Intact is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Intact Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial Corp 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial Corp has no effect on the direction of Walmart i.e., Walmart and Intact Financial go up and down completely randomly.

Pair Corralation between Walmart and Intact Financial

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 1.32 times more return on investment than Intact Financial. However, Walmart is 1.32 times more volatile than Intact Financial Corp. It trades about 0.14 of its potential returns per unit of risk. Intact Financial Corp is currently generating about 0.06 per unit of risk. If you would invest  1,988  in Walmart Inc CDR on December 2, 2024 and sell it today you would earn a total of  2,283  from holding Walmart Inc CDR or generate 114.84% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Intact Financial Corp

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.

Intact Financial Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Intact Financial

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

The idea behind Walmart Inc CDR and Intact Financial Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.