Correlation Between Walmart and LOWES

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

By analyzing existing cross correlation between Walmart and LOWES INC 3375, you can compare the effects of market volatilities on Walmart and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and LOWES.

Diversification Opportunities for Walmart and LOWES

0.18

Correlation Coefficient

Walmart  LOWES

Average diversification

The 3 months correlation between Walmart and LOWES is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and LOWES INC 3375 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 3375 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 3375 has no effect on the direction of Walmart i.e., Walmart and LOWES go up and down completely randomly.

Pair Corralation between Walmart and LOWES

Considering the 90-day investment horizon Walmart is expected to under-perform the LOWES. In addition to that, Walmart is 6.06 times more volatile than LOWES INC 3375. It trades about -0.05 of its total potential returns per unit of risk. LOWES INC 3375 is currently generating about 0.0 per unit of volatility. If you would invest  9,909  in LOWES INC 3375 on December 30, 2024 and sell it today you would earn a total of  1.00  from holding LOWES INC 3375 or generate 0.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  LOWES INC 3375

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

LOWES INC 3375

Risk-Adjusted Performance

Very Weak

Over the last 90 days LOWES INC 3375 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LOWES is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and LOWES

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

The idea behind Walmart and LOWES INC 3375 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.