Correlation Between Walmart and Cannlabs

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

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

Diversification Opportunities for Walmart and Cannlabs

-0.54

Correlation Coefficient

Walmart  Cannlabs

Excellent diversification

The 3 months correlation between Walmart and Cannlabs is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cannlabs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannlabs 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 Cannlabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannlabs has no effect on the direction of Walmart i.e., Walmart and Cannlabs go up and down completely randomly.

Pair Corralation between Walmart and Cannlabs

If you would invest  9,268  in Walmart on October 25, 2024 and sell it today you would earn a total of  113.00  from holding Walmart or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Walmart  vs.  Cannlabs

Walmart

Risk-Adjusted Performance

16 of 100

Good

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 unfluctuating primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cannlabs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cannlabs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Cannlabs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Cannlabs

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

The idea behind Walmart and Cannlabs 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..