Correlation Between Walmart and Pacer Cash

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

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

Diversification Opportunities for Walmart and Pacer Cash

0.62

Correlation Coefficient

Walmart  Pacer Cash

Poor diversification

The 3 months correlation between Walmart and Pacer is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows 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 Pacer Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Walmart i.e., Walmart and Pacer Cash go up and down completely randomly.

Pair Corralation between Walmart and Pacer Cash

Considering the 90-day investment horizon Walmart is expected to under-perform the Pacer Cash. In addition to that, Walmart is 1.96 times more volatile than Pacer Cash Cows. It trades about -0.05 of its total potential returns per unit of risk. Pacer Cash Cows is currently generating about -0.05 per unit of volatility. If you would invest  5,593  in Pacer Cash Cows on December 28, 2024 and sell it today you would lose (159.00) from holding Pacer Cash Cows or give up 2.84% of portfolio value over 90 days.

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

Walmart  vs.  Pacer Cash Cows

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.

Pacer Cash Cows

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacer Cash Cows has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Pacer Cash is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Pacer Cash

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

The idea behind Walmart and Pacer Cash Cows 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 Stocks Directory module to find actively traded stocks across global markets.