Correlation Between Walmart and Wilmington Capital

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

Diversification Opportunities for Walmart and Wilmington Capital

-0.49

Correlation Coefficient

Walmart  Wilmington Capital

Very good diversification

The 3 months correlation between Walmart and Wilmington is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Walmart i.e., Walmart and Wilmington Capital go up and down completely randomly.

Pair Corralation between Walmart and Wilmington Capital

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.28 times more return on investment than Wilmington Capital. However, Walmart Inc CDR is 3.56 times less risky than Wilmington Capital. It trades about 0.12 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.02 per unit of risk. If you would invest  2,112  in Walmart Inc CDR on October 4, 2024 and sell it today you would earn a total of  1,813  from holding Walmart Inc CDR or generate 85.84% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Wilmington Capital Management

Walmart Inc CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Walmart and Wilmington Capital

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

The idea behind Walmart Inc CDR and Wilmington Capital 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.