Correlation Between Walmart and Eneti

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

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

Diversification Opportunities for Walmart and Eneti

0.77

Correlation Coefficient

Walmart  Eneti

Poor diversification

The 3 months correlation between Walmart and Eneti is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Eneti Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneti Inc 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 Eneti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneti Inc has no effect on the direction of Walmart i.e., Walmart and Eneti go up and down completely randomly.

Pair Corralation between Walmart and Eneti

If you would invest  7,717  in Walmart on September 3, 2024 and sell it today you would earn a total of  1,533  from holding Walmart or generate 19.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Walmart  vs.  Eneti Inc

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eneti Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eneti Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Eneti is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Walmart and Eneti

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

The idea behind Walmart and Eneti Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.