Correlation Between Walmart and Edgio

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

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

Diversification Opportunities for Walmart and Edgio

-0.65

Correlation Coefficient

Walmart  Edgio

Excellent diversification

The 3 months correlation between Walmart and Edgio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Walmart i.e., Walmart and Edgio go up and down completely randomly.

Pair Corralation between Walmart and Edgio

Considering the 90-day investment horizon Walmart is expected to generate 46.29 times less return on investment than Edgio. But when comparing it to its historical volatility, Walmart is 80.25 times less risky than Edgio. It trades about 0.13 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,680  in Edgio Inc on October 8, 2024 and sell it today you would lose (5,678) from holding Edgio Inc or give up 99.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.76%
Values	Daily Returns

Walmart  vs.  Edgio Inc

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) 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.

Edgio Inc

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Edgio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Edgio

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

The idea behind Walmart and Edgio Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.