Correlation Between Crocs and Walmart

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Can any of the company-specific risk be diversified away by investing in both Crocs 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 Crocs and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crocs Inc and Walmart, you can compare the effects of market volatilities on Crocs 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 Crocs with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crocs and Walmart.

Diversification Opportunities for Crocs and Walmart

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Crocs and Walmart is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Crocs 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 Crocs Inc 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 has no effect on the direction of Crocs i.e., Crocs and Walmart go up and down completely randomly.

Pair Corralation between Crocs and Walmart

Given the investment horizon of 90 days Crocs Inc is expected to generate 2.75 times more return on investment than Walmart. However, Crocs is 2.75 times more volatile than Walmart. It trades about 0.4 of its potential returns per unit of risk. Walmart is currently generating about 0.14 per unit of risk. If you would invest  12,109  in Crocs Inc on December 29, 2023 and sell it today you would earn a total of  2,193  from holding Crocs Inc or generate 18.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Crocs Inc  vs.  Walmart

 Performance 
       Timeline  
Crocs Inc 

Risk-Adjusted Performance

16 of 100

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

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) 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.

Crocs and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Crocs and Walmart

The main advantage of trading using opposite Crocs and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs 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 Crocs Inc and Walmart 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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