Correlation Between Walmart and Aarons
Can any of the company-specific risk be diversified away by investing in both Walmart and Aarons 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 Aarons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and The Aarons, you can compare the effects of market volatilities on Walmart and Aarons 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 Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Aarons.
Diversification Opportunities for Walmart and Aarons
Pay attention - limited upside
The 3 months correlation between Walmart and Aarons is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons 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 Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of Walmart i.e., Walmart and Aarons go up and down completely randomly.
Pair Corralation between Walmart and Aarons
Considering the 90-day investment horizon Walmart is expected to generate 0.19 times more return on investment than Aarons. However, Walmart is 5.19 times less risky than Aarons. It trades about 0.1 of its potential returns per unit of risk. The Aarons is currently generating about -0.19 per unit of risk. If you would invest 5,832 in Walmart on January 24, 2024 and sell it today you would earn a total of 182.00 from holding Walmart or generate 3.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. The Aarons
Performance |
| Timeline |
| Walmart |
| Aarons |
Walmart and Aarons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Aarons
The main advantage of trading using opposite Walmart and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Aarons 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 Aarons will offset losses from the drop in Aarons' long position.| Walmart vs. Big Lots | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Aarons vs. Floor Decor Holdings | Aarons vs. Live Ventures | Aarons vs. LL Flooring Holdings | Aarons vs. Arhaus Inc |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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