Correlation Between Walmart and Internet Infinity

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

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

Diversification Opportunities for Walmart and Internet Infinity

-0.37

Correlation Coefficient

Walmart  Internet Infinity

Very good diversification

The 3 months correlation between Walmart and Internet is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Internet Infinity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Infinity 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 Internet Infinity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Infinity has no effect on the direction of Walmart i.e., Walmart and Internet Infinity go up and down completely randomly.

Pair Corralation between Walmart and Internet Infinity

Considering the 90-day investment horizon Walmart is expected to generate 1.12 times less return on investment than Internet Infinity. But when comparing it to its historical volatility, Walmart is 4.48 times less risky than Internet Infinity. It trades about 0.19 of its potential returns per unit of risk. Internet Infinity is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.92  in Internet Infinity on October 22, 2024 and sell it today you would earn a total of  0.14  from holding Internet Infinity or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Walmart  vs.  Internet Infinity

Walmart

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Internet Infinity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internet Infinity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Internet Infinity

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

The idea behind Walmart and Internet Infinity 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.