Correlation Between Walmart and QNB Corp

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

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

Diversification Opportunities for Walmart and QNB Corp

0.87

Correlation Coefficient

Walmart  QNB Corp

Very poor diversification

The 3 months correlation between Walmart and QNB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp 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 QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Walmart i.e., Walmart and QNB Corp go up and down completely randomly.

Pair Corralation between Walmart and QNB Corp

Considering the 90-day investment horizon Walmart is expected to generate 1.51 times more return on investment than QNB Corp. However, Walmart is 1.51 times more volatile than QNB Corp. It trades about 0.55 of its potential returns per unit of risk. QNB Corp is currently generating about 0.34 per unit of risk. If you would invest  8,245  in Walmart on September 5, 2024 and sell it today you would earn a total of  1,106  from holding Walmart or generate 13.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Walmart  vs.  QNB Corp

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 inconsistent primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

QNB Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, QNB Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walmart and QNB Corp

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

The idea behind Walmart and QNB Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.