Correlation Between Walmart and 78387GAQ6

Can any of the company-specific risk be diversified away by investing in both Walmart and 78387GAQ6 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 78387GAQ6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and SBC MUNICATIONS INC, you can compare the effects of market volatilities on Walmart and 78387GAQ6 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 78387GAQ6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and 78387GAQ6.

Diversification Opportunities for Walmart and 78387GAQ6

-0.37

Correlation Coefficient

Walmart  78387GAQ6

Very good diversification

The 3 months correlation between Walmart and 78387GAQ6 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and SBC MUNICATIONS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC MUNICATIONS INC 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 78387GAQ6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC MUNICATIONS INC has no effect on the direction of Walmart i.e., Walmart and 78387GAQ6 go up and down completely randomly.

Pair Corralation between Walmart and 78387GAQ6

Considering the 90-day investment horizon Walmart is expected to generate 0.88 times more return on investment than 78387GAQ6. However, Walmart is 1.13 times less risky than 78387GAQ6. It trades about 0.27 of its potential returns per unit of risk. SBC MUNICATIONS INC is currently generating about -0.09 per unit of risk. If you would invest  7,724  in Walmart on September 4, 2024 and sell it today you would earn a total of  1,540  from holding Walmart or generate 19.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.63%
Values	Daily Returns

Walmart  vs.  SBC MUNICATIONS INC

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) 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.

SBC MUNICATIONS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SBC MUNICATIONS INC 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 SBC MUNICATIONS INC investors.

Pair Trading with Walmart and 78387GAQ6

The main advantage of trading using opposite Walmart and 78387GAQ6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, 78387GAQ6 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 78387GAQ6 will offset losses from the drop in 78387GAQ6's long position.

The idea behind Walmart and SBC MUNICATIONS INC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.