Correlation Between Walmart and Real Matters

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

Diversification Opportunities for Walmart and Real Matters

0.04

Correlation Coefficient

Walmart  Real Matters

Significant diversification

The 3 months correlation between Walmart and Real is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Real Matters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Matters 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 Real Matters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Matters has no effect on the direction of Walmart i.e., Walmart and Real Matters go up and down completely randomly.

Pair Corralation between Walmart and Real Matters

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.88 times more return on investment than Real Matters. However, Walmart Inc CDR is 1.14 times less risky than Real Matters. It trades about -0.04 of its potential returns per unit of risk. Real Matters is currently generating about -0.05 per unit of risk. If you would invest  3,919  in Walmart Inc CDR on December 30, 2024 and sell it today you would lose (246.00) from holding Walmart Inc CDR or give up 6.28% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  Real Matters

Walmart Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Walmart is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Real Matters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Matters has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Walmart and Real Matters

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

The idea behind Walmart Inc CDR and Real Matters 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.