Correlation Between Walmart and Regen BioPharma

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

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

Diversification Opportunities for Walmart and Regen BioPharma

0.38

Correlation Coefficient

Walmart  Regen BioPharma

Weak diversification

The 3 months correlation between Walmart and Regen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Regen BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regen BioPharma 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 Regen BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regen BioPharma has no effect on the direction of Walmart i.e., Walmart and Regen BioPharma go up and down completely randomly.

Pair Corralation between Walmart and Regen BioPharma

Considering the 90-day investment horizon Walmart is expected to under-perform the Regen BioPharma. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 10.53 times less risky than Regen BioPharma. The stock trades about -0.05 of its potential returns per unit of risk. The Regen BioPharma is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Regen BioPharma on December 27, 2024 and sell it today you would lose (1.99) from holding Regen BioPharma or give up 28.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Walmart  vs.  Regen BioPharma

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 comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Regen BioPharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regen BioPharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Regen BioPharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Regen BioPharma

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

The idea behind Walmart and Regen BioPharma 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.