Correlation Between Walmart and Fandom Sports

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

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

Diversification Opportunities for Walmart and Fandom Sports

-0.41

Correlation Coefficient

Walmart  Fandom Sports

Very good diversification

The 3 months correlation between Walmart and Fandom is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fandom Sports Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fandom Sports Media 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 Fandom Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fandom Sports Media has no effect on the direction of Walmart i.e., Walmart and Fandom Sports go up and down completely randomly.

Pair Corralation between Walmart and Fandom Sports

Considering the 90-day investment horizon Walmart is expected to generate 78.49 times less return on investment than Fandom Sports. But when comparing it to its historical volatility, Walmart is 203.34 times less risky than Fandom Sports. It trades about 0.56 of its potential returns per unit of risk. Fandom Sports Media is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Fandom Sports Media on September 4, 2024 and sell it today you would earn a total of  0.36  from holding Fandom Sports Media or generate 900.0% 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.  Fandom Sports Media

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) 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.

Fandom Sports Media

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fandom Sports Media are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fandom Sports reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Fandom Sports

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

The idea behind Walmart and Fandom Sports Media 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.