Correlation Between Walmart and Matson Money

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

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

Diversification Opportunities for Walmart and Matson Money

0.48

Correlation Coefficient

Walmart  Matson Money

Very weak diversification

The 3 months correlation between Walmart and Matson is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Matson Money Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Money Equity 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 Matson Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Money Equity has no effect on the direction of Walmart i.e., Walmart and Matson Money go up and down completely randomly.

Pair Corralation between Walmart and Matson Money

Considering the 90-day investment horizon Walmart is expected to generate 1.82 times more return on investment than Matson Money. However, Walmart is 1.82 times more volatile than Matson Money Equity. It trades about -0.04 of its potential returns per unit of risk. Matson Money Equity is currently generating about -0.08 per unit of risk. If you would invest  9,032  in Walmart on December 29, 2024 and sell it today you would lose (469.00) from holding Walmart or give up 5.19% of portfolio value over 90 days.

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

Walmart  vs.  Matson Money Equity

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.

Matson Money Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matson Money Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Matson Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Matson Money

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

The idea behind Walmart and Matson Money Equity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.