Correlation Between Walmart and Radient Technologies

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

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

Diversification Opportunities for Walmart and Radient Technologies

-0.41

Correlation Coefficient

Walmart  Radient Technologies

Very good diversification

The 3 months correlation between Walmart and Radient is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Radient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radient Technologies 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 Radient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radient Technologies has no effect on the direction of Walmart i.e., Walmart and Radient Technologies go up and down completely randomly.

Pair Corralation between Walmart and Radient Technologies

Considering the 90-day investment horizon Walmart is expected to generate 41.6 times less return on investment than Radient Technologies. But when comparing it to its historical volatility, Walmart is 59.45 times less risky than Radient Technologies. It trades about 0.15 of its potential returns per unit of risk. Radient Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Radient Technologies on October 8, 2024 and sell it today you would lose (0.08) from holding Radient Technologies or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.65%
Values	Daily Returns

Walmart  vs.  Radient Technologies

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

Radient Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radient Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Radient Technologies

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

The idea behind Walmart and Radient Technologies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.