Correlation Between Walmart and Slate Office

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

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

Diversification Opportunities for Walmart and Slate Office

-0.41

Correlation Coefficient

Walmart  Slate Office

Very good diversification

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

Pair Corralation between Walmart and Slate Office

Considering the 90-day investment horizon Walmart is expected to generate 1.69 times less return on investment than Slate Office. But when comparing it to its historical volatility, Walmart is 8.45 times less risky than Slate Office. It trades about 0.29 of its potential returns per unit of risk. Slate Office REIT is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Slate Office REIT on September 17, 2024 and sell it today you would earn a total of  3.00  from holding Slate Office REIT or generate 11.54% return on investment over 90 days.

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

Walmart  vs.  Slate Office REIT

Walmart

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 23 (%) 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.

Slate Office REIT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Slate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Slate Office

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

The idea behind Walmart and Slate Office REIT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.