Correlation Between Walmart and Weis Markets
Can any of the company-specific risk be diversified away by investing in both Walmart and Weis Markets 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 Weis Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Weis Markets, you can compare the effects of market volatilities on Walmart and Weis Markets 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 Weis Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Weis Markets.
Diversification Opportunities for Walmart and Weis Markets
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Weis is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Weis Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weis Markets 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 Weis Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weis Markets has no effect on the direction of Walmart i.e., Walmart and Weis Markets go up and down completely randomly.
Pair Corralation between Walmart and Weis Markets
Considering the 90-day investment horizon Walmart is expected to generate 0.75 times more return on investment than Weis Markets. However, Walmart is 1.33 times less risky than Weis Markets. It trades about -0.12 of its potential returns per unit of risk. Weis Markets is currently generating about -0.12 per unit of risk. If you would invest 6,086 in Walmart on January 18, 2024 and sell it today you would lose (102.00) from holding Walmart or give up 1.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Walmart vs. Weis Markets
Performance |
Timeline |
Walmart |
Weis Markets |
Walmart and Weis Markets Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Walmart and Weis Markets
The main advantage of trading using opposite Walmart and Weis Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Weis Markets 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 Weis Markets will offset losses from the drop in Weis Markets' long position.Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Big Lots |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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