Correlation Between Walmart and Citizens Bancshares

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

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

Diversification Opportunities for Walmart and Citizens Bancshares

0.35

Correlation Coefficient

Walmart  Citizens Bancshares

Weak diversification

The 3 months correlation between Walmart and Citizens is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Citizens Bancshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancshares 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 Citizens Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancshares Corp has no effect on the direction of Walmart i.e., Walmart and Citizens Bancshares go up and down completely randomly.

Pair Corralation between Walmart and Citizens Bancshares

Considering the 90-day investment horizon Walmart is expected to under-perform the Citizens Bancshares. In addition to that, Walmart is 1.14 times more volatile than Citizens Bancshares Corp. It trades about -0.05 of its total potential returns per unit of risk. Citizens Bancshares Corp is currently generating about 0.06 per unit of volatility. If you would invest  4,965  in Citizens Bancshares Corp on December 29, 2024 and sell it today you would earn a total of  232.00  from holding Citizens Bancshares Corp or generate 4.67% return on investment over 90 days.

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

Walmart  vs.  Citizens Bancshares Corp

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.

Citizens Bancshares Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancshares Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Citizens Bancshares is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and Citizens Bancshares

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

The idea behind Walmart and Citizens Bancshares 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 Stocks Directory module to find actively traded stocks across global markets.