Correlation Between Walmart and INC

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

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

Diversification Opportunities for Walmart and INC

0.0

Correlation Coefficient

Walmart  INC

Pay attention - limited upside

The 3 months correlation between Walmart and INC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC 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 INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC has no effect on the direction of Walmart i.e., Walmart and INC go up and down completely randomly.

Pair Corralation between Walmart and INC

If you would invest (100.00) in INC on December 27, 2024 and sell it today you would earn a total of  100.00  from holding INC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walmart  vs.  INC

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 unsteady 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.

INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days INC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, INC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and INC

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

The idea behind Walmart and INC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.