Correlation Between Walmart and FlexShares Core

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

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

Diversification Opportunities for Walmart and FlexShares Core

-0.14

Correlation Coefficient

Walmart  FlexShares Core

Good diversification

The 3 months correlation between Walmart and FlexShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FlexShares Core Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Core Select 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 FlexShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Core Select has no effect on the direction of Walmart i.e., Walmart and FlexShares Core go up and down completely randomly.

Pair Corralation between Walmart and FlexShares Core

Considering the 90-day investment horizon Walmart is expected to under-perform the FlexShares Core. In addition to that, Walmart is 5.51 times more volatile than FlexShares Core Select. It trades about -0.05 of its total potential returns per unit of risk. FlexShares Core Select is currently generating about 0.13 per unit of volatility. If you would invest  2,164  in FlexShares Core Select on December 29, 2024 and sell it today you would earn a total of  53.00  from holding FlexShares Core Select or generate 2.45% return on investment over 90 days.

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

Walmart  vs.  FlexShares Core Select

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 comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

FlexShares Core Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Core Select are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, FlexShares Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and FlexShares Core

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

The idea behind Walmart and FlexShares Core Select 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.