Correlation Between Walmart and Ridgeworth Ceredex

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

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

Diversification Opportunities for Walmart and Ridgeworth Ceredex

0.81

Correlation Coefficient

Walmart  Ridgeworth Ceredex

Very poor diversification

The 3 months correlation between Walmart and Ridgeworth is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ridgeworth Ceredex Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgeworth Ceredex Mid 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 Ridgeworth Ceredex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgeworth Ceredex Mid has no effect on the direction of Walmart i.e., Walmart and Ridgeworth Ceredex go up and down completely randomly.

Pair Corralation between Walmart and Ridgeworth Ceredex

Considering the 90-day investment horizon Walmart is expected to generate 1.12 times more return on investment than Ridgeworth Ceredex. However, Walmart is 1.12 times more volatile than Ridgeworth Ceredex Mid Cap. It trades about 0.26 of its potential returns per unit of risk. Ridgeworth Ceredex Mid Cap is currently generating about 0.13 per unit of risk. If you would invest  7,717  in Walmart on August 31, 2024 and sell it today you would earn a total of  1,471  from holding Walmart or generate 19.06% return on investment over 90 days.

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

Walmart  vs.  Ridgeworth Ceredex Mid Cap

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ridgeworth Ceredex Mid

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ridgeworth Ceredex Mid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ridgeworth Ceredex may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Walmart and Ridgeworth Ceredex

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

The idea behind Walmart and Ridgeworth Ceredex Mid Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.