Correlation Between Walmart and Curaleaf Holdings

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

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

Diversification Opportunities for Walmart and Curaleaf Holdings

-0.72

Correlation Coefficient

Walmart  Curaleaf Holdings

Pay attention - limited upside

The 3 months correlation between Walmart and Curaleaf is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Curaleaf Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curaleaf Holdings 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 Curaleaf Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curaleaf Holdings has no effect on the direction of Walmart i.e., Walmart and Curaleaf Holdings go up and down completely randomly.

Pair Corralation between Walmart and Curaleaf Holdings

Considering the 90-day investment horizon Walmart is expected to generate 0.1 times more return on investment than Curaleaf Holdings. However, Walmart is 9.66 times less risky than Curaleaf Holdings. It trades about 0.52 of its potential returns per unit of risk. Curaleaf Holdings is currently generating about -0.17 per unit of risk. If you would invest  8,245  in Walmart on September 4, 2024 and sell it today you would earn a total of  1,019  from holding Walmart or generate 12.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Walmart  vs.  Curaleaf Holdings

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Curaleaf Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curaleaf Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Curaleaf Holdings

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

The idea behind Walmart and Curaleaf Holdings 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.