Correlation Between Walmart and Viatris

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

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

Diversification Opportunities for Walmart and Viatris

0.76

Correlation Coefficient

Walmart  Viatris

Poor diversification

The 3 months correlation between Walmart and Viatris is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris 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 Viatris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viatris has no effect on the direction of Walmart i.e., Walmart and Viatris go up and down completely randomly.

Pair Corralation between Walmart and Viatris

Considering the 90-day investment horizon Walmart is expected to generate 0.47 times more return on investment than Viatris. However, Walmart is 2.14 times less risky than Viatris. It trades about 0.26 of its potential returns per unit of risk. Viatris is currently generating about 0.08 per unit of risk. If you would invest  7,717  in Walmart on August 31, 2024 and sell it today you would earn a total of  1,471  from holding Walmart or generate 19.06% return on investment over 90 days.

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

Walmart  vs.  Viatris

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Viatris

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viatris are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Viatris may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Walmart and Viatris

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

The idea behind Walmart and Viatris 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 Transaction History module to view history of all your transactions and understand their impact on performance.