Correlation Between Walmart and Vanguard Total

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

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

Diversification Opportunities for Walmart and Vanguard Total

-0.22

Correlation Coefficient

Walmart  Vanguard Total

Very good diversification

The 3 months correlation between Walmart and Vanguard is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond 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 Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Walmart i.e., Walmart and Vanguard Total go up and down completely randomly.

Pair Corralation between Walmart and Vanguard Total

Considering the 90-day investment horizon Walmart is expected to under-perform the Vanguard Total. In addition to that, Walmart is 5.75 times more volatile than Vanguard Total Bond. It trades about -0.05 of its total potential returns per unit of risk. Vanguard Total Bond is currently generating about 0.12 per unit of volatility. If you would invest  941.00  in Vanguard Total Bond on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Vanguard Total Bond or generate 2.34% return on investment over 90 days.

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

Walmart  vs.  Vanguard Total Bond

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

Vanguard Total Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Bond are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Total 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 Vanguard Total

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

The idea behind Walmart and Vanguard Total Bond 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.