Correlation Between Walmart and Wishpond Technologies

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

Diversification Opportunities for Walmart and Wishpond Technologies

-0.58

Correlation Coefficient

Walmart  Wishpond Technologies

Excellent diversification

The 3 months correlation between Walmart and Wishpond is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Wishpond Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wishpond Technologies 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 Wishpond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wishpond Technologies has no effect on the direction of Walmart i.e., Walmart and Wishpond Technologies go up and down completely randomly.

Pair Corralation between Walmart and Wishpond Technologies

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.15 times more return on investment than Wishpond Technologies. However, Walmart Inc CDR is 6.81 times less risky than Wishpond Technologies. It trades about 0.53 of its potential returns per unit of risk. Wishpond Technologies is currently generating about -0.04 per unit of risk. If you would invest  3,544  in Walmart Inc CDR on August 31, 2024 and sell it today you would earn a total of  493.00  from holding Walmart Inc CDR or generate 13.91% 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.  Wishpond Technologies

Walmart Inc CDR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Wishpond Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wishpond Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Walmart and Wishpond Technologies

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

The idea behind Walmart Inc CDR and Wishpond Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.