Correlation Between Walmart and Sika AG

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

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

Diversification Opportunities for Walmart and Sika AG

0.18

Correlation Coefficient

Walmart  Sika AG

Average diversification

The 3 months correlation between Walmart and Sika is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR 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 Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of Walmart i.e., Walmart and Sika AG go up and down completely randomly.

Pair Corralation between Walmart and Sika AG

Considering the 90-day investment horizon Walmart is expected to under-perform the Sika AG. In addition to that, Walmart is 1.1 times more volatile than Sika AG ADR. It trades about -0.04 of its total potential returns per unit of risk. Sika AG ADR is currently generating about 0.07 per unit of volatility. If you would invest  2,382  in Sika AG ADR on December 28, 2024 and sell it today you would earn a total of  148.00  from holding Sika AG ADR or generate 6.21% return on investment over 90 days.

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

Walmart  vs.  Sika AG ADR

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.

Sika AG ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sika AG ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sika AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Sika AG

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

The idea behind Walmart and Sika AG ADR 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.