Correlation Between Walmart and 25278XAT6

Can any of the company-specific risk be diversified away by investing in both Walmart and 25278XAT6 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 25278XAT6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and FANG 425 15 MAR 52, you can compare the effects of market volatilities on Walmart and 25278XAT6 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 25278XAT6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 25278XAT6.

Diversification Opportunities for Walmart and 25278XAT6

-0.44

Correlation Coefficient

Walmart  25278XAT6

Very good diversification

The 3 months correlation between Walmart and 25278XAT6 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FANG 425 15 MAR 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FANG 425 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 25278XAT6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FANG 425 15 has no effect on the direction of Walmart i.e., Walmart and 25278XAT6 go up and down completely randomly.

Pair Corralation between Walmart and 25278XAT6

Considering the 90-day investment horizon Walmart is expected to generate 1.31 times more return on investment than 25278XAT6. However, Walmart is 1.31 times more volatile than FANG 425 15 MAR 52. It trades about 0.25 of its potential returns per unit of risk. FANG 425 15 MAR 52 is currently generating about -0.13 per unit of risk. If you would invest  8,060  in Walmart on September 13, 2024 and sell it today you would earn a total of  1,436  from holding Walmart or generate 17.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Walmart  vs.  FANG 425 15 MAR 52

Walmart

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 19 (%) 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.

FANG 425 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FANG 425 15 MAR 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 FANG 425 15 MAR 52 investors.

Pair Trading with Walmart and 25278XAT6

The main advantage of trading using opposite Walmart and 25278XAT6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 25278XAT6 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 25278XAT6 will offset losses from the drop in 25278XAT6's long position.

The idea behind Walmart and FANG 425 15 MAR 52 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..