Correlation Between Walmart and NOVHOL

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

By analyzing existing cross correlation between Walmart and NOVHOL 6625 15 APR 29, you can compare the effects of market volatilities on Walmart and NOVHOL 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 NOVHOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and NOVHOL.

Diversification Opportunities for Walmart and NOVHOL

-0.39

Correlation Coefficient

Walmart  NOVHOL

Very good diversification

The 3 months correlation between Walmart and NOVHOL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and NOVHOL 6625 15 APR 29 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVHOL 6625 15 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 NOVHOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVHOL 6625 15 has no effect on the direction of Walmart i.e., Walmart and NOVHOL go up and down completely randomly.

Pair Corralation between Walmart and NOVHOL

Considering the 90-day investment horizon Walmart is expected to generate 1.46 times more return on investment than NOVHOL. However, Walmart is 1.46 times more volatile than NOVHOL 6625 15 APR 29. It trades about 0.18 of its potential returns per unit of risk. NOVHOL 6625 15 APR 29 is currently generating about -0.16 per unit of risk. If you would invest  8,109  in Walmart on October 1, 2024 and sell it today you would earn a total of  1,057  from holding Walmart or generate 13.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Walmart  vs.  NOVHOL 6625 15 APR 29

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 uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

NOVHOL 6625 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVHOL 6625 15 APR 29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NOVHOL 6625 15 APR 29 investors.

Pair Trading with Walmart and NOVHOL

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

The idea behind Walmart and NOVHOL 6625 15 APR 29 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.