Correlation Between Walmart and Mountain Crest

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

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

Diversification Opportunities for Walmart and Mountain Crest

-0.94

Correlation Coefficient

Walmart  Mountain Crest

Pay attention - limited upside

The 3 months correlation between Walmart and Mountain is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Mountain Crest Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain Crest Acqui 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 Mountain Crest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain Crest Acqui has no effect on the direction of Walmart i.e., Walmart and Mountain Crest go up and down completely randomly.

Pair Corralation between Walmart and Mountain Crest

Considering the 90-day investment horizon Walmart is expected to generate 0.05 times more return on investment than Mountain Crest. However, Walmart is 19.2 times less risky than Mountain Crest. It trades about 0.14 of its potential returns per unit of risk. Mountain Crest Acquisition is currently generating about -0.22 per unit of risk. If you would invest  4,600  in Walmart on September 20, 2024 and sell it today you would earn a total of  4,766  from holding Walmart or generate 103.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	9.68%
Values	Daily Returns

Walmart  vs.  Mountain Crest Acquisition

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) 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.

Mountain Crest Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and Mountain Crest

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

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