Correlation Between Walmart and ProShares UltraShort

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

By analyzing existing cross correlation between Walmart and ProShares UltraShort Industrials, you can compare the effects of market volatilities on Walmart and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ProShares UltraShort.

Diversification Opportunities for Walmart and ProShares UltraShort

-0.87

Correlation Coefficient

Walmart  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between Walmart and ProShares is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ProShares UltraShort Industria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort has no effect on the direction of Walmart i.e., Walmart and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Walmart and ProShares UltraShort

Considering the 90-day investment horizon Walmart is expected to generate 0.52 times more return on investment than ProShares UltraShort. However, Walmart is 1.92 times less risky than ProShares UltraShort. It trades about -0.02 of its potential returns per unit of risk. ProShares UltraShort Industrials is currently generating about -0.02 per unit of risk. If you would invest  6,036  in Walmart on February 5, 2024 and sell it today you would lose (54.00) from holding Walmart or give up 0.89% of portfolio value over 90 days.

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

Walmart  vs.  ProShares UltraShort Industria

Walmart

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in June 2024.

ProShares UltraShort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares UltraShort Industrials has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Etf's forward indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

Pair Trading with Walmart and ProShares UltraShort

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

The idea behind Walmart and ProShares UltraShort Industrials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.