Correlation Between Walmart and AAR Corp

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Can any of the company-specific risk be diversified away by investing in both Walmart and AAR Corp 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 AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and AAR Corp, you can compare the effects of market volatilities on Walmart and AAR Corp 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 AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and AAR Corp.

Diversification Opportunities for Walmart and AAR Corp

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Walmart and AAR Corp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp 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 AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Walmart i.e., Walmart and AAR Corp go up and down completely randomly.

Pair Corralation between Walmart and AAR Corp

Considering the 90-day investment horizon Walmart is expected to under-perform the AAR Corp. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.87 times less risky than AAR Corp. The stock trades about 0.0 of its potential returns per unit of risk. The AAR Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,067  in AAR Corp on July 3, 2022 and sell it today you would earn a total of  1,515  from holding AAR Corp or generate 73.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  AAR Corp

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Walmart Price Channel

AAR Corp 
AAR Corp Performance
0 of 100
Over the last 90 days AAR Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

AAR Corp Price Channel

Walmart and AAR Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and AAR Corp

The main advantage of trading using opposite Walmart and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.
Walmart vs. Amazon Inc
The idea behind Walmart and AAR Corp 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.
AAR Corp vs. Amazon 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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