Correlation Between Walmart and ORIX

Can any of the company-specific risk be diversified away by investing in both Walmart and ORIX 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 ORIX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and ORIX Corporation, you can compare the effects of market volatilities on Walmart and ORIX 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 ORIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ORIX.

Diversification Opportunities for Walmart and ORIX

-0.37

Correlation Coefficient

Walmart  ORIX

Very good diversification

The 3 months correlation between Walmart and ORIX is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 are associated (or correlated) with ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of Walmart i.e., Walmart and ORIX go up and down completely randomly.

Pair Corralation between Walmart and ORIX

Assuming the 90 days trading horizon Walmart is expected to generate 0.92 times more return on investment than ORIX. However, Walmart is 1.09 times less risky than ORIX. It trades about 0.07 of its potential returns per unit of risk. ORIX Corporation is currently generating about -0.09 per unit of risk. If you would invest  8,799  in Walmart on December 1, 2024 and sell it today you would earn a total of  553.00  from holding Walmart or generate 6.28% return on investment over 90 days.

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

Walmart  vs.  ORIX Corp.

Walmart

Risk-Adjusted Performance

Modest

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

ORIX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ORIX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Walmart and ORIX

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

The idea behind Walmart and ORIX Corporation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.