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

0.21

Correlation Coefficient

Walmart  ORIX

Modest diversification

The 3 months correlation between Walmart and ORIX is 0.21. 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 under-perform the ORIX. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.05 times less risky than ORIX. The stock trades about -0.09 of its potential returns per unit of risk. The ORIX Corporation is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  2,040  in ORIX Corporation on December 30, 2024 and sell it today you would lose (140.00) from holding ORIX Corporation or give up 6.86% of portfolio value over 90 days.

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

Walmart  vs.  ORIX Corp.

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

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 nearly stable basic indicators, ORIX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.