Correlation Between Walmart and Astoria Quality

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

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

Diversification Opportunities for Walmart and Astoria Quality

0.8

Correlation Coefficient

Walmart  Astoria Quality

Very poor diversification

The 3 months correlation between Walmart and Astoria is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Astoria Quality Kings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoria Quality Kings 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 Astoria Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoria Quality Kings has no effect on the direction of Walmart i.e., Walmart and Astoria Quality go up and down completely randomly.

Pair Corralation between Walmart and Astoria Quality

Considering the 90-day investment horizon Walmart is expected to under-perform the Astoria Quality. In addition to that, Walmart is 1.74 times more volatile than Astoria Quality Kings. It trades about -0.05 of its total potential returns per unit of risk. Astoria Quality Kings is currently generating about -0.07 per unit of volatility. If you would invest  3,045  in Astoria Quality Kings on December 28, 2024 and sell it today you would lose (140.31) from holding Astoria Quality Kings or give up 4.61% of portfolio value over 90 days.

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

Walmart  vs.  Astoria Quality Kings

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.

Astoria Quality Kings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astoria Quality Kings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astoria Quality is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and Astoria Quality

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

The idea behind Walmart and Astoria Quality Kings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.