Correlation Between Walmart and LOEWS

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

By analyzing existing cross correlation between Walmart and LOEWS P 6, you can compare the effects of market volatilities on Walmart and LOEWS 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 LOEWS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and LOEWS.

Diversification Opportunities for Walmart and LOEWS

0.51

Correlation Coefficient

Walmart  LOEWS

Very weak diversification

The 3 months correlation between Walmart and LOEWS is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and LOEWS P 6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOEWS P 6 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 LOEWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOEWS P 6 has no effect on the direction of Walmart i.e., Walmart and LOEWS go up and down completely randomly.

Pair Corralation between Walmart and LOEWS

Considering the 90-day investment horizon Walmart is expected to under-perform the LOEWS. In addition to that, Walmart is 2.61 times more volatile than LOEWS P 6. It trades about -0.04 of its total potential returns per unit of risk. LOEWS P 6 is currently generating about 0.0 per unit of volatility. If you would invest  10,657  in LOEWS P 6 on December 23, 2024 and sell it today you would lose (11.00) from holding LOEWS P 6 or give up 0.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.8%
Values	Daily Returns

Walmart  vs.  LOEWS P 6

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 comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

LOEWS P 6

Risk-Adjusted Performance

Very Weak

Over the last 90 days LOEWS P 6 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LOEWS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and LOEWS

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

The idea behind Walmart and LOEWS P 6 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.