Correlation Between Walmart and NaturalShrimp

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

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

Diversification Opportunities for Walmart and NaturalShrimp

-0.6

Correlation Coefficient

Walmart  NaturalShrimp

Excellent diversification

The 3 months correlation between Walmart and NaturalShrimp is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and NaturalShrimp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NaturalShrimp 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 NaturalShrimp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NaturalShrimp has no effect on the direction of Walmart i.e., Walmart and NaturalShrimp go up and down completely randomly.

Pair Corralation between Walmart and NaturalShrimp

Considering the 90-day investment horizon Walmart is expected to generate 0.08 times more return on investment than NaturalShrimp. However, Walmart is 13.28 times less risky than NaturalShrimp. It trades about -0.13 of its potential returns per unit of risk. NaturalShrimp is currently generating about -0.03 per unit of risk. If you would invest  9,362  in Walmart on October 10, 2024 and sell it today you would lose (281.00) from holding Walmart or give up 3.0% of portfolio value over 90 days.

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

Walmart  vs.  NaturalShrimp

Walmart

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) 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.

NaturalShrimp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NaturalShrimp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Walmart and NaturalShrimp

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

The idea behind Walmart and NaturalShrimp 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.