Correlation Between Walmart and Centr Brands

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

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

Diversification Opportunities for Walmart and Centr Brands

-0.49

Correlation Coefficient

Walmart  Centr Brands

Very good diversification

The 3 months correlation between Walmart and Centr is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Centr Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centr Brands Corp 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 Centr Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centr Brands Corp has no effect on the direction of Walmart i.e., Walmart and Centr Brands go up and down completely randomly.

Pair Corralation between Walmart and Centr Brands

Considering the 90-day investment horizon Walmart is expected to generate 9.57 times less return on investment than Centr Brands. But when comparing it to its historical volatility, Walmart is 25.89 times less risky than Centr Brands. It trades about 0.23 of its potential returns per unit of risk. Centr Brands Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7.60  in Centr Brands Corp on September 14, 2024 and sell it today you would lose (2.22) from holding Centr Brands Corp or give up 29.21% of portfolio value over 90 days.

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

Walmart  vs.  Centr Brands Corp

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) 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.

Centr Brands Corp

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Walmart and Centr Brands

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

The idea behind Walmart and Centr Brands Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.