Correlation Between Walmart and Dimensional ETF

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

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

Diversification Opportunities for Walmart and Dimensional ETF

-0.5

Correlation Coefficient

Walmart  Dimensional ETF

Very good diversification

The 3 months correlation between Walmart and Dimensional is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Walmart i.e., Walmart and Dimensional ETF go up and down completely randomly.

Pair Corralation between Walmart and Dimensional ETF

Considering the 90-day investment horizon Walmart is expected to generate 3.99 times more return on investment than Dimensional ETF. However, Walmart is 3.99 times more volatile than Dimensional ETF Trust. It trades about 0.23 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about -0.14 per unit of risk. If you would invest  8,056  in Walmart on September 14, 2024 and sell it today you would earn a total of  1,353  from holding Walmart or generate 16.79% return on investment over 90 days.

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

Walmart  vs.  Dimensional ETF Trust

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.

Dimensional ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walmart and Dimensional ETF

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

The idea behind Walmart and Dimensional ETF Trust 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.