Correlation Between Walmart and El Puerto

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

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

Diversification Opportunities for Walmart and El Puerto

-0.66

Correlation Coefficient

Walmart  El Puerto

Excellent diversification

The 3 months correlation between Walmart and ELPQF is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and El Puerto de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Puerto de 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 El Puerto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Puerto de has no effect on the direction of Walmart i.e., Walmart and El Puerto go up and down completely randomly.

Pair Corralation between Walmart and El Puerto

Considering the 90-day investment horizon Walmart is expected to under-perform the El Puerto. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.26 times less risky than El Puerto. The stock trades about -0.19 of its potential returns per unit of risk. The El Puerto de is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  500.00  in El Puerto de on October 5, 2024 and sell it today you would lose (7.00) from holding El Puerto de or give up 1.4% of portfolio value over 90 days.

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

Walmart  vs.  El Puerto de

Walmart

Risk-Adjusted Performance

16 of 100

Good

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 weak primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

El Puerto de

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and El Puerto

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

The idea behind Walmart and El Puerto de 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.