Correlation Between Walmart and Vapotherm

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

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

Diversification Opportunities for Walmart and Vapotherm

-0.48

Correlation Coefficient

Walmart  Vapotherm

Very good diversification

The 3 months correlation between Walmart and Vapotherm is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vapotherm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vapotherm 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 Vapotherm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vapotherm has no effect on the direction of Walmart i.e., Walmart and Vapotherm go up and down completely randomly.

Pair Corralation between Walmart and Vapotherm

If you would invest  40.00  in Vapotherm on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Vapotherm or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Walmart  vs.  Vapotherm

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) 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.

Vapotherm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vapotherm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vapotherm is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Vapotherm

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

The idea behind Walmart and Vapotherm 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.