Correlation Between Walmart and ProShares Nasdaq

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

By analyzing existing cross correlation between Walmart and ProShares Nasdaq 100 Dorsey, you can compare the effects of market volatilities on Walmart and ProShares Nasdaq 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 ProShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ProShares Nasdaq.

Diversification Opportunities for Walmart and ProShares Nasdaq

0.87

Correlation Coefficient

Walmart  ProShares Nasdaq

Very poor diversification

The 3 months correlation between Walmart and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ProShares Nasdaq 100 Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nasdaq 100 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 ProShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nasdaq 100 has no effect on the direction of Walmart i.e., Walmart and ProShares Nasdaq go up and down completely randomly.

Pair Corralation between Walmart and ProShares Nasdaq

Considering the 90-day investment horizon Walmart is expected to generate 0.81 times more return on investment than ProShares Nasdaq. However, Walmart is 1.23 times less risky than ProShares Nasdaq. It trades about 0.2 of its potential returns per unit of risk. ProShares Nasdaq 100 Dorsey is currently generating about 0.15 per unit of risk. If you would invest  8,233  in Walmart on October 25, 2024 and sell it today you would earn a total of  1,090  from holding Walmart or generate 13.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Walmart  vs.  ProShares Nasdaq 100 Dorsey

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

ProShares Nasdaq 100

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Nasdaq 100 Dorsey are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ProShares Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Walmart and ProShares Nasdaq

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

The idea behind Walmart and ProShares Nasdaq 100 Dorsey 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.