Correlation Between Walmart and Vow ASA

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

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

Diversification Opportunities for Walmart and Vow ASA

0.3

Correlation Coefficient

Walmart  Vow ASA

Weak diversification

The 3 months correlation between Walmart and Vow is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA 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 Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of Walmart i.e., Walmart and Vow ASA go up and down completely randomly.

Pair Corralation between Walmart and Vow ASA

Considering the 90-day investment horizon Walmart is expected to under-perform the Vow ASA. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 3.42 times less risky than Vow ASA. The stock trades about -0.04 of its potential returns per unit of risk. The Vow ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Vow ASA on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Vow ASA or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Walmart  vs.  Vow ASA

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.

Vow ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Vow ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Vow ASA

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

The idea behind Walmart and Vow ASA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.