Correlation Between Walmart and XPDBW Old

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

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

Diversification Opportunities for Walmart and XPDBW Old

0.0

Correlation Coefficient

Walmart  XPDBW Old

Pay attention - limited upside

The 3 months correlation between Walmart and XPDBW is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and XPDBW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPDBW Old 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 XPDBW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPDBW Old has no effect on the direction of Walmart i.e., Walmart and XPDBW Old go up and down completely randomly.

Pair Corralation between Walmart and XPDBW Old

Considering the 90-day investment horizon Walmart is expected to generate 26.2 times less return on investment than XPDBW Old. But when comparing it to its historical volatility, Walmart is 37.9 times less risky than XPDBW Old. It trades about 0.14 of its potential returns per unit of risk. XPDBW Old is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11.00  in XPDBW Old on October 25, 2024 and sell it today you would lose (1.00) from holding XPDBW Old or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	18.46%
Values	Daily Returns

Walmart  vs.  XPDBW Old

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 unfluctuating primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

XPDBW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XPDBW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, XPDBW Old is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and XPDBW Old

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

The idea behind Walmart and XPDBW Old 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.