Correlation Between Walmart and Vanguard FTSE

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

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

Diversification Opportunities for Walmart and Vanguard FTSE

-0.01

Correlation Coefficient

Walmart  Vanguard FTSE

Good diversification

The 3 months correlation between Walmart and Vanguard is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vanguard FTSE Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard FTSE Developed 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 FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard FTSE Developed has no effect on the direction of Walmart i.e., Walmart and Vanguard FTSE go up and down completely randomly.

Pair Corralation between Walmart and Vanguard FTSE

Considering the 90-day investment horizon Walmart is expected to under-perform the Vanguard FTSE. In addition to that, Walmart is 1.99 times more volatile than Vanguard FTSE Developed. It trades about -0.04 of its total potential returns per unit of risk. Vanguard FTSE Developed is currently generating about 0.14 per unit of volatility. If you would invest  4,759  in Vanguard FTSE Developed on December 29, 2024 and sell it today you would earn a total of  365.00  from holding Vanguard FTSE Developed or generate 7.67% 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 FTSE Developed

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.

Vanguard FTSE Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Developed are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and Vanguard FTSE

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

The idea behind Walmart and Vanguard FTSE Developed 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.