Correlation Between Walmart and Invesco NASDAQ

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

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

Diversification Opportunities for Walmart and Invesco NASDAQ

0.77

Correlation Coefficient

Walmart  Invesco NASDAQ

Poor diversification

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

Pair Corralation between Walmart and Invesco NASDAQ

Considering the 90-day investment horizon Walmart is expected to under-perform the Invesco NASDAQ. In addition to that, Walmart is 1.49 times more volatile than Invesco NASDAQ Next. It trades about -0.07 of its total potential returns per unit of risk. Invesco NASDAQ Next is currently generating about -0.05 per unit of volatility. If you would invest  3,165  in Invesco NASDAQ Next on December 26, 2024 and sell it today you would lose (127.00) from holding Invesco NASDAQ Next or give up 4.01% of portfolio value over 90 days.

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

Walmart  vs.  Invesco NASDAQ Next

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.

Invesco NASDAQ Next

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco NASDAQ Next has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Invesco NASDAQ is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Walmart and Invesco NASDAQ

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

The idea behind Walmart and Invesco NASDAQ Next 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.