Correlation Between Walmart and Tekla Healthcare

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

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

Diversification Opportunities for Walmart and Tekla Healthcare

-0.68

Correlation Coefficient

Walmart  Tekla Healthcare

Excellent diversification

The 3 months correlation between Walmart and Tekla is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp 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 Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of Walmart i.e., Walmart and Tekla Healthcare go up and down completely randomly.

Pair Corralation between Walmart and Tekla Healthcare

Considering the 90-day investment horizon Walmart is expected to generate 1.04 times more return on investment than Tekla Healthcare. However, Walmart is 1.04 times more volatile than Tekla Healthcare Opportunities. It trades about 0.19 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about -0.01 per unit of risk. If you would invest  7,002  in Walmart on October 20, 2024 and sell it today you would earn a total of  2,192  from holding Walmart or generate 31.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Walmart  vs.  Tekla Healthcare Opportunities

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) 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.

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with latest inconsistent performance, the Fund's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Pair Trading with Walmart and Tekla Healthcare

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

The idea behind Walmart and Tekla Healthcare Opportunities 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..