Correlation Between Walmart and JPMorgan Diversified

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

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

Diversification Opportunities for Walmart and JPMorgan Diversified

0.07

Correlation Coefficient

Walmart  JPMorgan Diversified

Significant diversification

The 3 months correlation between Walmart and JPMorgan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and JPMorgan Diversified Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Diversified 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 JPMorgan Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Diversified has no effect on the direction of Walmart i.e., Walmart and JPMorgan Diversified go up and down completely randomly.

Pair Corralation between Walmart and JPMorgan Diversified

Considering the 90-day investment horizon Walmart is expected to generate 2.27 times more return on investment than JPMorgan Diversified. However, Walmart is 2.27 times more volatile than JPMorgan Diversified Return. It trades about 0.08 of its potential returns per unit of risk. JPMorgan Diversified Return is currently generating about -0.09 per unit of risk. If you would invest  9,244  in Walmart on December 1, 2024 and sell it today you would earn a total of  617.00  from holding Walmart or generate 6.67% return on investment over 90 days.

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

Walmart  vs.  JPMorgan Diversified Return

Walmart

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JPMorgan Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPMorgan Diversified Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JPMorgan Diversified is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and JPMorgan Diversified

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

The idea behind Walmart and JPMorgan Diversified Return 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.