Correlation Between Walmart and Marubeni Corp

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

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

Diversification Opportunities for Walmart and Marubeni Corp

-0.41

Correlation Coefficient

Walmart  Marubeni Corp

Very good diversification

The 3 months correlation between Walmart and Marubeni is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Marubeni Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni Corp ADR 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 Marubeni Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni Corp ADR has no effect on the direction of Walmart i.e., Walmart and Marubeni Corp go up and down completely randomly.

Pair Corralation between Walmart and Marubeni Corp

Considering the 90-day investment horizon Walmart is expected to under-perform the Marubeni Corp. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.17 times less risky than Marubeni Corp. The stock trades about -0.05 of its potential returns per unit of risk. The Marubeni Corp ADR is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15,059  in Marubeni Corp ADR on December 29, 2024 and sell it today you would earn a total of  1,466  from holding Marubeni Corp ADR or generate 9.74% return on investment over 90 days.

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

Walmart  vs.  Marubeni Corp ADR

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.

Marubeni Corp ADR

Risk-Adjusted Performance

Modest

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

Pair Trading with Walmart and Marubeni Corp

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

The idea behind Walmart and Marubeni Corp ADR 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.