Correlation Between Walmart and Wise Plc

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

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

Diversification Opportunities for Walmart and Wise Plc

0.94

Correlation Coefficient

Walmart  Wise Plc

Almost no diversification

The 3 months correlation between Walmart and Wise is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Wise plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wise plc 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 Wise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wise plc has no effect on the direction of Walmart i.e., Walmart and Wise Plc go up and down completely randomly.

Pair Corralation between Walmart and Wise Plc

Considering the 90-day investment horizon Walmart is expected to generate 2.85 times less return on investment than Wise Plc. But when comparing it to its historical volatility, Walmart is 1.99 times less risky than Wise Plc. It trades about 0.22 of its potential returns per unit of risk. Wise plc is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  889.00  in Wise plc on September 22, 2024 and sell it today you would earn a total of  432.00  from holding Wise plc or generate 48.59% return on investment over 90 days.

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

Walmart  vs.  Wise plc

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) 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.

Wise plc

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wise plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent technical and fundamental indicators, Wise Plc showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Wise Plc

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

The idea behind Walmart and Wise plc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.