Correlation Between Walmart and Greenlite Ventures

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

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

Diversification Opportunities for Walmart and Greenlite Ventures

-0.42

Correlation Coefficient

Walmart  Greenlite Ventures

Very good diversification

The 3 months correlation between Walmart and Greenlite is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Greenlite Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlite Ventures 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 Greenlite Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlite Ventures has no effect on the direction of Walmart i.e., Walmart and Greenlite Ventures go up and down completely randomly.

Pair Corralation between Walmart and Greenlite Ventures

Considering the 90-day investment horizon Walmart is expected to generate 0.12 times more return on investment than Greenlite Ventures. However, Walmart is 8.57 times less risky than Greenlite Ventures. It trades about 0.08 of its potential returns per unit of risk. Greenlite Ventures is currently generating about -0.1 per unit of risk. If you would invest  9,244  in Walmart on December 2, 2024 and sell it today you would earn a total of  617.00  from holding Walmart or generate 6.67% 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.  Greenlite Ventures

Walmart

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Greenlite Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenlite Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Walmart and Greenlite Ventures

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

The idea behind Walmart and Greenlite Ventures 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 Transaction History module to view history of all your transactions and understand their impact on performance.