Correlation Between Walmart and Aeon Ventures

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

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

Diversification Opportunities for Walmart and Aeon Ventures

0.34

Correlation Coefficient

Walmart  Aeon Ventures

Weak diversification

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

Pair Corralation between Walmart and Aeon Ventures

Considering the 90-day investment horizon Walmart is expected to under-perform the Aeon Ventures. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 7.01 times less risky than Aeon Ventures. The stock trades about -0.06 of its potential returns per unit of risk. The Aeon Ventures is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Aeon Ventures on December 19, 2024 and sell it today you would lose (0.70) from holding Aeon Ventures or give up 41.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Walmart  vs.  Aeon Ventures

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 weak 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.

Aeon Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeon Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Walmart and Aeon Ventures

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

The idea behind Walmart and Aeon 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 Global Correlations module to find global opportunities by holding instruments from different markets.