Correlation Between Walmart and Goldman Sachs

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

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

Diversification Opportunities for Walmart and Goldman Sachs

-0.44

Correlation Coefficient

Walmart  Goldman Sachs

Very good diversification

The 3 months correlation between Walmart and Goldman is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Goldman Sachs Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Global 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Global has no effect on the direction of Walmart i.e., Walmart and Goldman Sachs go up and down completely randomly.

Pair Corralation between Walmart and Goldman Sachs

Considering the 90-day investment horizon Walmart is expected to generate 1.18 times more return on investment than Goldman Sachs. However, Walmart is 1.18 times more volatile than Goldman Sachs Global. It trades about 0.2 of its potential returns per unit of risk. Goldman Sachs Global is currently generating about -0.13 per unit of risk. If you would invest  7,953  in Walmart on October 8, 2024 and sell it today you would earn a total of  1,125  from holding Walmart or generate 14.15% 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.  Goldman Sachs Global

Walmart

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Walmart and Goldman Sachs

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

The idea behind Walmart and Goldman Sachs Global 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.