Correlation Between Walmart and Pimco Long

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

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

Diversification Opportunities for Walmart and Pimco Long

0.03

Correlation Coefficient

Walmart  Pimco Long

Significant diversification

The 3 months correlation between Walmart and Pimco is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Pimco Long Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Term 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 Pimco Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Term has no effect on the direction of Walmart i.e., Walmart and Pimco Long go up and down completely randomly.

Pair Corralation between Walmart and Pimco Long

Considering the 90-day investment horizon Walmart is expected to under-perform the Pimco Long. In addition to that, Walmart is 2.45 times more volatile than Pimco Long Term Government. It trades about -0.06 of its total potential returns per unit of risk. Pimco Long Term Government is currently generating about 0.11 per unit of volatility. If you would invest  1,366  in Pimco Long Term Government on December 20, 2024 and sell it today you would earn a total of  64.00  from holding Pimco Long Term Government or generate 4.69% return on investment over 90 days.

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

Walmart  vs.  Pimco Long Term Government

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 uncertain 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.

Pimco Long Term

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Long Term Government are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Long is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Pimco Long

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

The idea behind Walmart and Pimco Long Term Government 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.