Correlation Between Walmart and 50247VAB5

Can any of the company-specific risk be diversified away by investing in both Walmart and 50247VAB5 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 50247VAB5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and LYB INTL FIN, you can compare the effects of market volatilities on Walmart and 50247VAB5 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 50247VAB5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 50247VAB5.

Diversification Opportunities for Walmart and 50247VAB5

-0.45

Correlation Coefficient

Walmart  50247VAB5

Very good diversification

The 3 months correlation between Walmart and 50247VAB5 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and LYB INTL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTL FIN 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 50247VAB5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTL FIN has no effect on the direction of Walmart i.e., Walmart and 50247VAB5 go up and down completely randomly.

Pair Corralation between Walmart and 50247VAB5

Considering the 90-day investment horizon Walmart is expected to generate 0.66 times more return on investment than 50247VAB5. However, Walmart is 1.52 times less risky than 50247VAB5. It trades about 0.1 of its potential returns per unit of risk. LYB INTL FIN is currently generating about -0.15 per unit of risk. If you would invest  9,035  in Walmart on October 22, 2024 and sell it today you would earn a total of  159.00  from holding Walmart or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Walmart  vs.  LYB INTL FIN

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.

LYB INTL FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB INTL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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 LYB INTL FIN investors.

Pair Trading with Walmart and 50247VAB5

The main advantage of trading using opposite Walmart and 50247VAB5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 50247VAB5 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 50247VAB5 will offset losses from the drop in 50247VAB5's long position.

The idea behind Walmart and LYB INTL FIN 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.