Correlation Between Walmart and Xsabx

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

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

Diversification Opportunities for Walmart and Xsabx

0.96

Correlation Coefficient

Walmart  Xsabx

Almost no diversification

The 3 months correlation between Walmart and Xsabx is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Xsabx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xsabx 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 Xsabx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xsabx has no effect on the direction of Walmart i.e., Walmart and Xsabx go up and down completely randomly.

Pair Corralation between Walmart and Xsabx

Considering the 90-day investment horizon Walmart is expected to generate 1.89 times less return on investment than Xsabx. But when comparing it to its historical volatility, Walmart is 5.66 times less risky than Xsabx. It trades about 0.21 of its potential returns per unit of risk. Xsabx is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  438.00  in Xsabx on September 21, 2024 and sell it today you would earn a total of  580.00  from holding Xsabx or generate 132.42% 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.  Xsabx

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) 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.

Xsabx

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xsabx are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Xsabx may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Walmart and Xsabx

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

The idea behind Walmart and Xsabx 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.