Correlation Between Walmart and AUTONATION

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

By analyzing existing cross correlation between Walmart and AUTONATION INC 38, you can compare the effects of market volatilities on Walmart and AUTONATION 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 AUTONATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and AUTONATION.

Diversification Opportunities for Walmart and AUTONATION

-0.21

Correlation Coefficient

Walmart  AUTONATION

Very good diversification

The 3 months correlation between Walmart and AUTONATION is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AUTONATION INC 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTONATION INC 38 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 AUTONATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTONATION INC 38 has no effect on the direction of Walmart i.e., Walmart and AUTONATION go up and down completely randomly.

Pair Corralation between Walmart and AUTONATION

Considering the 90-day investment horizon Walmart is expected to generate 1.78 times more return on investment than AUTONATION. However, Walmart is 1.78 times more volatile than AUTONATION INC 38. It trades about 0.2 of its potential returns per unit of risk. AUTONATION INC 38 is currently generating about 0.01 per unit of risk. If you would invest  5,411  in Walmart on October 22, 2024 and sell it today you would earn a total of  3,783  from holding Walmart or generate 69.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Walmart  vs.  AUTONATION INC 38

Walmart

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AUTONATION INC 38

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUTONATION INC 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AUTONATION is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and AUTONATION

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

The idea behind Walmart and AUTONATION INC 38 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.