Correlation Between Walmart and REX FANG

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

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

Diversification Opportunities for Walmart and REX FANG

0.43

Correlation Coefficient

Walmart  REX FANG

Very weak diversification

The 3 months correlation between Walmart and REX is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and REX FANG Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX FANG Innovation 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 REX FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX FANG Innovation has no effect on the direction of Walmart i.e., Walmart and REX FANG go up and down completely randomly.

Pair Corralation between Walmart and REX FANG

Considering the 90-day investment horizon Walmart is expected to under-perform the REX FANG. In addition to that, Walmart is 1.22 times more volatile than REX FANG Innovation. It trades about -0.07 of its total potential returns per unit of risk. REX FANG Innovation is currently generating about -0.09 per unit of volatility. If you would invest  4,709  in REX FANG Innovation on December 19, 2024 and sell it today you would lose (378.00) from holding REX FANG Innovation or give up 8.03% of portfolio value over 90 days.

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

Walmart  vs.  REX FANG Innovation

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 latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

REX FANG Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days REX FANG Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Pair Trading with Walmart and REX FANG

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

The idea behind Walmart and REX FANG Innovation 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .