Correlation Between Walmart and Fastbase

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

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

Diversification Opportunities for Walmart and Fastbase

-0.19

Correlation Coefficient

Walmart  Fastbase

Good diversification

The 3 months correlation between Walmart and Fastbase is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fastbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastbase 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 Fastbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastbase has no effect on the direction of Walmart i.e., Walmart and Fastbase go up and down completely randomly.

Pair Corralation between Walmart and Fastbase

Considering the 90-day investment horizon Walmart is expected to under-perform the Fastbase. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 7.84 times less risky than Fastbase. The stock trades about -0.05 of its potential returns per unit of risk. The Fastbase is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  150.00  in Fastbase on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Fastbase or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.59%
Values	Daily Returns

Walmart  vs.  Fastbase

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.

Fastbase

Risk-Adjusted Performance

Modest

Over the last 90 days Fastbase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Fastbase

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

The idea behind Walmart and Fastbase 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.