Correlation Between Walmart and Bancroft Fund

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

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

Diversification Opportunities for Walmart and Bancroft Fund

0.19

Correlation Coefficient

Walmart  Bancroft Fund

Average diversification

The 3 months correlation between Walmart and Bancroft is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bancroft Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancroft Fund 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 Bancroft Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancroft Fund has no effect on the direction of Walmart i.e., Walmart and Bancroft Fund go up and down completely randomly.

Pair Corralation between Walmart and Bancroft Fund

Considering the 90-day investment horizon Walmart is expected to generate 1.5 times more return on investment than Bancroft Fund. However, Walmart is 1.5 times more volatile than Bancroft Fund. It trades about 0.1 of its potential returns per unit of risk. Bancroft Fund is currently generating about 0.02 per unit of risk. If you would invest  4,890  in Walmart on December 27, 2024 and sell it today you would earn a total of  3,631  from holding Walmart or generate 74.25% return on investment over 90 days.

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

Walmart  vs.  Bancroft Fund

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 unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bancroft Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bancroft Fund are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bancroft Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Bancroft Fund

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

The idea behind Walmart and Bancroft Fund 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.