Correlation Between Grab Holdings and Walmart

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

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

Diversification Opportunities for Grab Holdings and Walmart

0.21

Correlation Coefficient

Grab Holdings  Walmart

Modest diversification

The 3 months correlation between Grab and Walmart is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Grab Holdings and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Grab Holdings 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 Grab Holdings 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 Grab Holdings i.e., Grab Holdings and Walmart go up and down completely randomly.

Pair Corralation between Grab Holdings and Walmart

Given the investment horizon of 90 days Grab Holdings is expected to generate 1.12 times more return on investment than Walmart. However, Grab Holdings is 1.12 times more volatile than Walmart. It trades about 0.7 of its potential returns per unit of risk. Walmart is currently generating about 0.21 per unit of risk. If you would invest  321.00  in Grab Holdings on June 29, 2024 and sell it today you would earn a total of  64.00  from holding Grab Holdings or generate 19.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Grab Holdings  vs.  Walmart

Grab Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grab Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Grab Holdings may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grab Holdings and Walmart

The main advantage of trading using opposite Grab Holdings and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grab Holdings 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 Grab Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.