Correlation Between Walmart and Powered Brands

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

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

Diversification Opportunities for Walmart and Powered Brands

0.0

Correlation Coefficient

Walmart  Powered Brands

Pay attention - limited upside

The 3 months correlation between Walmart and Powered is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Powered Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powered Brands 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 Powered Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powered Brands has no effect on the direction of Walmart i.e., Walmart and Powered Brands go up and down completely randomly.

Pair Corralation between Walmart and Powered Brands

If you would invest (100.00) in Powered Brands on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Powered Brands or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walmart  vs.  Powered Brands

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.

Powered Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powered Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Powered Brands is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and Powered Brands

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

The idea behind Walmart and Powered Brands 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.