Correlation Between Walmart and WisdomTree Mortgage

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

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

Diversification Opportunities for Walmart and WisdomTree Mortgage

-0.15

Correlation Coefficient

Walmart  WisdomTree Mortgage

Good diversification

The 3 months correlation between Walmart and WisdomTree is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and WisdomTree Mortgage Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Mortgage Plus 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 WisdomTree Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Mortgage Plus has no effect on the direction of Walmart i.e., Walmart and WisdomTree Mortgage go up and down completely randomly.

Pair Corralation between Walmart and WisdomTree Mortgage

Considering the 90-day investment horizon Walmart is expected to under-perform the WisdomTree Mortgage. In addition to that, Walmart is 5.6 times more volatile than WisdomTree Mortgage Plus. It trades about -0.06 of its total potential returns per unit of risk. WisdomTree Mortgage Plus is currently generating about 0.11 per unit of volatility. If you would invest  4,264  in WisdomTree Mortgage Plus on December 27, 2024 and sell it today you would earn a total of  90.00  from holding WisdomTree Mortgage Plus or generate 2.11% return on investment over 90 days.

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

Walmart  vs.  WisdomTree Mortgage Plus

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 latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

WisdomTree Mortgage Plus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Mortgage Plus are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, WisdomTree Mortgage is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walmart and WisdomTree Mortgage

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

The idea behind Walmart and WisdomTree Mortgage Plus 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 Commodity Directory module to find actively traded commodities issued by global exchanges.