Correlation Between Walmart and George Weston

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

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

Diversification Opportunities for Walmart and George Weston

-0.43

Correlation Coefficient

Walmart  George Weston

Very good diversification

The 3 months correlation between Walmart and George is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and George Weston Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on George Weston Limited 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 George Weston. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of George Weston Limited has no effect on the direction of Walmart i.e., Walmart and George Weston go up and down completely randomly.

Pair Corralation between Walmart and George Weston

Considering the 90-day investment horizon Walmart is expected to under-perform the George Weston. In addition to that, Walmart is 1.61 times more volatile than George Weston Limited. It trades about -0.04 of its total potential returns per unit of risk. George Weston Limited is currently generating about 0.1 per unit of volatility. If you would invest  15,808  in George Weston Limited on December 29, 2024 and sell it today you would earn a total of  1,016  from holding George Weston Limited or generate 6.43% return on investment over 90 days.

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

Walmart  vs.  George Weston Limited

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.

George Weston Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in George Weston Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, George Weston may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Walmart and George Weston

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

The idea behind Walmart and George Weston Limited 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.