Correlation Between Senvest Capital and Walmart

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

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

Diversification Opportunities for Senvest Capital and Walmart

0.73

Correlation Coefficient

Senvest Capital  Walmart

Poor diversification

The 3 months correlation between Senvest and Walmart is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Senvest Capital 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 Senvest Capital 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 Senvest Capital 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 Senvest Capital i.e., Senvest Capital and Walmart go up and down completely randomly.

Pair Corralation between Senvest Capital and Walmart

Assuming the 90 days trading horizon Senvest Capital is expected to generate 1.78 times more return on investment than Walmart. However, Senvest Capital is 1.78 times more volatile than Walmart Inc CDR. It trades about 0.1 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.17 per unit of risk. If you would invest  28,500  in Senvest Capital on March 12, 2024 and sell it today you would earn a total of  2,700  from holding Senvest Capital or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Senvest Capital  vs.  Walmart Inc CDR

Senvest Capital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Walmart Inc CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Senvest Capital and Walmart

The main advantage of trading using opposite Senvest Capital and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senvest Capital 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 Senvest Capital 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.