Correlation Between Walmart and Bleuacacia

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

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

Diversification Opportunities for Walmart and Bleuacacia

-0.38

Correlation Coefficient

Walmart  Bleuacacia

Very good diversification

The 3 months correlation between Walmart and Bleuacacia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bleuacacia Ltd Rights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bleuacacia Rights 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 Bleuacacia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bleuacacia Rights has no effect on the direction of Walmart i.e., Walmart and Bleuacacia go up and down completely randomly.

Pair Corralation between Walmart and Bleuacacia

Considering the 90-day investment horizon Walmart is expected to generate 158.36 times less return on investment than Bleuacacia. But when comparing it to its historical volatility, Walmart is 150.11 times less risky than Bleuacacia. It trades about 0.14 of its potential returns per unit of risk. Bleuacacia Ltd Rights is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Bleuacacia Ltd Rights on October 25, 2024 and sell it today you would lose (10.15) from holding Bleuacacia Ltd Rights or give up 92.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.5%
Values	Daily Returns

Walmart  vs.  Bleuacacia Ltd Rights

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) 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.

Bleuacacia Rights

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Bleuacacia Ltd Rights has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal basic indicators, Bleuacacia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Bleuacacia

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

The idea behind Walmart and Bleuacacia Ltd Rights 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.