Correlation Between Walmart and Intact Financial

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

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

Diversification Opportunities for Walmart and Intact Financial

0.04

Correlation Coefficient

Walmart  Intact Financial

Significant diversification

The 3 months correlation between Walmart and Intact is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Walmart i.e., Walmart and Intact Financial go up and down completely randomly.

Pair Corralation between Walmart and Intact Financial

Considering the 90-day investment horizon Walmart is expected to under-perform the Intact Financial. In addition to that, Walmart is 1.27 times more volatile than Intact Financial. It trades about -0.04 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.13 per unit of volatility. If you would invest  18,053  in Intact Financial on December 29, 2024 and sell it today you would earn a total of  1,911  from holding Intact Financial or generate 10.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  Intact Financial

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.

Intact Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intact Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Intact Financial

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

The idea behind Walmart and Intact Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.