Correlation Between Walmart and Adecco

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

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

Diversification Opportunities for Walmart and Adecco

-0.88

Correlation Coefficient

Walmart  Adecco

Pay attention - limited upside

The 3 months correlation between Walmart and Adecco is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group 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 Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Walmart i.e., Walmart and Adecco go up and down completely randomly.

Pair Corralation between Walmart and Adecco

Considering the 90-day investment horizon Walmart is expected to generate 0.57 times more return on investment than Adecco. However, Walmart is 1.75 times less risky than Adecco. It trades about 0.26 of its potential returns per unit of risk. Adecco Group is currently generating about -0.18 per unit of risk. If you would invest  7,717  in Walmart on August 31, 2024 and sell it today you would earn a total of  1,471  from holding Walmart or generate 19.06% return on investment over 90 days.

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

Walmart  vs.  Adecco Group

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group 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 strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Walmart and Adecco

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

The idea behind Walmart and Adecco Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.