Correlation Between Walmart and Wahed FTSE

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

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

Diversification Opportunities for Walmart and Wahed FTSE

0.68

Correlation Coefficient

Walmart  Wahed FTSE

Poor diversification

The 3 months correlation between Walmart and Wahed is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Wahed FTSE USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed FTSE USA 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 Wahed FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed FTSE USA has no effect on the direction of Walmart i.e., Walmart and Wahed FTSE go up and down completely randomly.

Pair Corralation between Walmart and Wahed FTSE

Considering the 90-day investment horizon Walmart is expected to generate 1.79 times more return on investment than Wahed FTSE. However, Walmart is 1.79 times more volatile than Wahed FTSE USA. It trades about -0.04 of its potential returns per unit of risk. Wahed FTSE USA is currently generating about -0.09 per unit of risk. If you would invest  9,032  in Walmart on December 28, 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	Significant
Accuracy	98.36%
Values	Daily Returns

Walmart  vs.  Wahed FTSE USA

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.

Wahed FTSE USA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Walmart and Wahed FTSE

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

The idea behind Walmart and Wahed FTSE USA 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.