Correlation Between Walmart and Thales SA

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

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

Diversification Opportunities for Walmart and Thales SA

-0.45

Correlation Coefficient

Walmart  Thales SA

Very good diversification

The 3 months correlation between Walmart and Thales is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of Walmart i.e., Walmart and Thales SA go up and down completely randomly.

Pair Corralation between Walmart and Thales SA

Considering the 90-day investment horizon Walmart is expected to under-perform the Thales SA. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 2.07 times less risky than Thales SA. The stock trades about -0.05 of its potential returns per unit of risk. The Thales SA ADR is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  2,859  in Thales SA ADR on December 28, 2024 and sell it today you would earn a total of  2,527  from holding Thales SA ADR or generate 88.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Walmart  vs.  Thales SA 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.

Thales SA ADR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thales SA ADR are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Thales SA showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Thales SA

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

The idea behind Walmart and Thales SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.