Correlation Between Walmart and IShares Morningstar

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

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

Diversification Opportunities for Walmart and IShares Morningstar

-0.64

Correlation Coefficient

Walmart  IShares Morningstar

Excellent diversification

The 3 months correlation between Walmart and IShares is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and iShares Morningstar Multi Asse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Walmart i.e., Walmart and IShares Morningstar go up and down completely randomly.

Pair Corralation between Walmart and IShares Morningstar

Considering the 90-day investment horizon Walmart is expected to generate 3.17 times more return on investment than IShares Morningstar. However, Walmart is 3.17 times more volatile than iShares Morningstar Multi Asset. It trades about 0.19 of its potential returns per unit of risk. iShares Morningstar Multi Asset is currently generating about -0.05 per unit of risk. If you would invest  8,257  in Walmart on October 26, 2024 and sell it today you would earn a total of  1,066  from holding Walmart or generate 12.91% return on investment over 90 days.

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

Walmart  vs.  iShares Morningstar Multi Asse

Walmart

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares Morningstar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Morningstar Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, IShares Morningstar 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 IShares Morningstar

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

The idea behind Walmart and iShares Morningstar Multi Asset 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.