Correlation Between Walmart and Bausch

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

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

Diversification Opportunities for Walmart and Bausch

0.1

Correlation Coefficient

Walmart  Bausch

Average diversification

The 3 months correlation between Walmart and Bausch is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health Companies 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 Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Walmart i.e., Walmart and Bausch go up and down completely randomly.

Pair Corralation between Walmart and Bausch

Considering the 90-day investment horizon Walmart is expected to generate 0.14 times more return on investment than Bausch. However, Walmart is 6.97 times less risky than Bausch. It trades about -0.06 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.02 per unit of risk. If you would invest  9,243  in Walmart on December 24, 2024 and sell it today you would lose (645.00) from holding Walmart or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Walmart  vs.  Bausch Health Companies

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 latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bausch Health Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Pair Trading with Walmart and Bausch

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

The idea behind Walmart and Bausch Health Companies 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.