Correlation Between Walmart and DELHAIZE

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

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

Diversification Opportunities for Walmart and DELHAIZE

-0.07

Correlation Coefficient

Walmart  DELHAIZE

Good diversification

The 3 months correlation between Walmart and DELHAIZE is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and DELHAIZE GROUP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DELHAIZE GROUP SA 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 DELHAIZE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DELHAIZE GROUP SA has no effect on the direction of Walmart i.e., Walmart and DELHAIZE go up and down completely randomly.

Pair Corralation between Walmart and DELHAIZE

Considering the 90-day investment horizon Walmart is expected to generate 0.76 times more return on investment than DELHAIZE. However, Walmart is 1.31 times less risky than DELHAIZE. It trades about 0.31 of its potential returns per unit of risk. DELHAIZE GROUP SA is currently generating about -0.1 per unit of risk. If you would invest  7,696  in Walmart on September 5, 2024 and sell it today you would earn a total of  1,749  from holding Walmart or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.5%
Values	Daily Returns

Walmart  vs.  DELHAIZE GROUP SA

Walmart

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

DELHAIZE GROUP SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DELHAIZE GROUP SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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 DELHAIZE GROUP SA investors.

Pair Trading with Walmart and DELHAIZE

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

The idea behind Walmart and DELHAIZE GROUP SA 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.