Correlation Between Walmart and Timothy Plan

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

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

Diversification Opportunities for Walmart and Timothy Plan

0.63

Correlation Coefficient

Walmart  Timothy Plan

Poor diversification

The 3 months correlation between Walmart and Timothy is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Timothy Plan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Plan 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 Timothy Plan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Plan has no effect on the direction of Walmart i.e., Walmart and Timothy Plan go up and down completely randomly.

Pair Corralation between Walmart and Timothy Plan

Considering the 90-day investment horizon Walmart is expected to generate 1.61 times more return on investment than Timothy Plan. However, Walmart is 1.61 times more volatile than Timothy Plan . It trades about 0.23 of its potential returns per unit of risk. Timothy Plan is currently generating about 0.04 per unit of risk. If you would invest  8,038  in Walmart on September 16, 2024 and sell it today you would earn a total of  1,387  from holding Walmart or generate 17.26% return on investment over 90 days.

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

Walmart  vs.  Timothy Plan

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) 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.

Timothy Plan

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Timothy Plan are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Timothy Plan is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and Timothy Plan

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

The idea behind Walmart and Timothy Plan 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.