Correlation Between Walmart and Exchange Bankshares

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

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

Diversification Opportunities for Walmart and Exchange Bankshares

0.0

Correlation Coefficient

Walmart  Exchange Bankshares

Pay attention - limited upside

The 3 months correlation between Walmart and Exchange is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares 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 Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of Walmart i.e., Walmart and Exchange Bankshares go up and down completely randomly.

Pair Corralation between Walmart and Exchange Bankshares

Considering the 90-day investment horizon Walmart is expected to under-perform the Exchange Bankshares. In addition to that, Walmart is 9.67 times more volatile than Exchange Bankshares. It trades about -0.04 of its total potential returns per unit of risk. Exchange Bankshares is currently generating about 0.58 per unit of volatility. If you would invest  4,775  in Exchange Bankshares on December 21, 2024 and sell it today you would earn a total of  15.00  from holding Exchange Bankshares or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Walmart  vs.  Exchange Bankshares

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Exchange Bankshares

Risk-Adjusted Performance

Excellent

Over the last 90 days Exchange Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak fundamental indicators, Exchange Bankshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Exchange Bankshares

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

The idea behind Walmart and Exchange Bankshares 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.