Correlation Between Westshore Terminals and Walmart

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

By analyzing existing cross correlation between Westshore Terminals Investment and Walmart Inc CDR, you can compare the effects of market volatilities on Westshore Terminals and Walmart 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 Westshore Terminals with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westshore Terminals and Walmart.

Diversification Opportunities for Westshore Terminals and Walmart

-0.4

Correlation Coefficient

Westshore Terminals  Walmart

Very good diversification

The 3 months correlation between Westshore and Walmart is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Walmart go up and down completely randomly.

Pair Corralation between Westshore Terminals and Walmart

Assuming the 90 days trading horizon Westshore Terminals Investment is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Westshore Terminals Investment is 1.12 times less risky than Walmart. The stock trades about -0.19 of its potential returns per unit of risk. The Walmart Inc CDR is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,835  in Walmart Inc CDR on September 22, 2024 and sell it today you would earn a total of  167.00  from holding Walmart Inc CDR or generate 4.35% return on investment over 90 days.

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

Westshore Terminals Investment  vs.  Walmart Inc CDR

Westshore Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westshore Terminals Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Westshore Terminals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Walmart Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Westshore Terminals and Walmart

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

The idea behind Westshore Terminals Investment and Walmart Inc CDR 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.