Correlation Between Walmart and Banco Do
Can any of the company-specific risk be diversified away by investing in both Walmart and Banco Do 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 Banco Do into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Banco Do Brasil, you can compare the effects of market volatilities on Walmart and Banco Do 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 Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Banco Do.
Diversification Opportunities for Walmart and Banco Do
Modest diversification
The 3 months correlation between Walmart and Banco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Banco Do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Do Brasil 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Do Brasil has no effect on the direction of Walmart i.e., Walmart and Banco Do go up and down completely randomly.
Pair Corralation between Walmart and Banco Do
Considering the 90-day investment horizon Walmart is expected to under-perform the Banco Do. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.25 times less risky than Banco Do. The stock trades about -0.05 of its potential returns per unit of risk. The Banco Do Brasil is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 399.00 in Banco Do Brasil on December 28, 2024 and sell it today you would earn a total of 104.00 from holding Banco Do Brasil or generate 26.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Walmart vs. Banco Do Brasil
Performance |
Timeline |
Walmart |
Banco Do Brasil |
Walmart and Banco Do Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and Banco Do
The main advantage of trading using opposite Walmart and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do's long position.Walmart vs. Natural Grocers by | Walmart vs. Ingles Markets Incorporated | Walmart vs. Weis Markets | Walmart vs. Grocery Outlet Holding |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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