Correlation Between Walmart and 1ST SUMMIT

Can any of the company-specific risk be diversified away by investing in both Walmart and 1ST SUMMIT 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 1ST SUMMIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and 1ST SUMMIT BANCORP, you can compare the effects of market volatilities on Walmart and 1ST SUMMIT 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 1ST SUMMIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 1ST SUMMIT.

Diversification Opportunities for Walmart and 1ST SUMMIT

0.24

Correlation Coefficient

Walmart  1ST SUMMIT

Modest diversification

The 3 months correlation between Walmart and 1ST is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and 1ST SUMMIT BANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1ST SUMMIT BANCORP 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 1ST SUMMIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1ST SUMMIT BANCORP has no effect on the direction of Walmart i.e., Walmart and 1ST SUMMIT go up and down completely randomly.

Pair Corralation between Walmart and 1ST SUMMIT

Considering the 90-day investment horizon Walmart is expected to under-perform the 1ST SUMMIT. In addition to that, Walmart is 2.22 times more volatile than 1ST SUMMIT BANCORP. It trades about -0.06 of its total potential returns per unit of risk. 1ST SUMMIT BANCORP is currently generating about -0.11 per unit of volatility. If you would invest  2,534  in 1ST SUMMIT BANCORP on December 27, 2024 and sell it today you would lose (134.00) from holding 1ST SUMMIT BANCORP or give up 5.29% of portfolio value over 90 days.

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

Walmart  vs.  1ST SUMMIT BANCORP

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 unsteady 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.

1ST SUMMIT BANCORP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1ST SUMMIT BANCORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, 1ST SUMMIT is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Walmart and 1ST SUMMIT

The main advantage of trading using opposite Walmart and 1ST SUMMIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 1ST SUMMIT 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 1ST SUMMIT will offset losses from the drop in 1ST SUMMIT's long position.

The idea behind Walmart and 1ST SUMMIT BANCORP 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.