Correlation Between Walmart and AdvisorShares STAR

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

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

Diversification Opportunities for Walmart and AdvisorShares STAR

0.78

Correlation Coefficient

Walmart  AdvisorShares STAR

Poor diversification

The 3 months correlation between Walmart and AdvisorShares is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AdvisorShares STAR Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares STAR Global 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 AdvisorShares STAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares STAR Global has no effect on the direction of Walmart i.e., Walmart and AdvisorShares STAR go up and down completely randomly.

Pair Corralation between Walmart and AdvisorShares STAR

Considering the 90-day investment horizon Walmart is expected to generate 1.95 times more return on investment than AdvisorShares STAR. However, Walmart is 1.95 times more volatile than AdvisorShares STAR Global. It trades about 0.17 of its potential returns per unit of risk. AdvisorShares STAR Global is currently generating about -0.16 per unit of risk. If you would invest  8,930  in Walmart on September 25, 2024 and sell it today you would earn a total of  294.00  from holding Walmart or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Walmart  vs.  AdvisorShares STAR Global

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) 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.

AdvisorShares STAR Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares STAR Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, AdvisorShares STAR 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 AdvisorShares STAR

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

The idea behind Walmart and AdvisorShares STAR Global 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.