Correlation Between Walmart and Givaudan

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

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

Diversification Opportunities for Walmart and Givaudan

-0.34

Correlation Coefficient

Walmart  Givaudan

Very good diversification

The 3 months correlation between Walmart and Givaudan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Walmart i.e., Walmart and Givaudan go up and down completely randomly.

Pair Corralation between Walmart and Givaudan

Considering the 90-day investment horizon Walmart is expected to under-perform the Givaudan. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.75 times less risky than Givaudan. The stock trades about -0.04 of its potential returns per unit of risk. The Givaudan SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  411,101  in Givaudan SA on December 29, 2024 and sell it today you would lose (1,857) from holding Givaudan SA or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Walmart  vs.  Givaudan SA

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.

Givaudan SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Givaudan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walmart and Givaudan

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

The idea behind Walmart and Givaudan SA 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 Stocks Directory module to find actively traded stocks across global markets.