Correlation Between Walmart and Avantis Real

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

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

Diversification Opportunities for Walmart and Avantis Real

-0.59

Correlation Coefficient

Walmart  Avantis Real

Excellent diversification

The 3 months correlation between Walmart and Avantis is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Avantis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Real Estate 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 Avantis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Real Estate has no effect on the direction of Walmart i.e., Walmart and Avantis Real go up and down completely randomly.

Pair Corralation between Walmart and Avantis Real

Considering the 90-day investment horizon Walmart is expected to generate 1.19 times more return on investment than Avantis Real. However, Walmart is 1.19 times more volatile than Avantis Real Estate. It trades about 0.4 of its potential returns per unit of risk. Avantis Real Estate is currently generating about -0.1 per unit of risk. If you would invest  8,029  in Walmart on September 13, 2024 and sell it today you would earn a total of  1,499  from holding Walmart or generate 18.67% return on investment over 90 days.

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

Walmart  vs.  Avantis Real Estate

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Avantis Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Walmart and Avantis Real

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

The idea behind Walmart and Avantis Real Estate 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.