Correlation Between Apple and Walmart

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

Diversification Opportunities for Apple and Walmart

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Apple and Walmart is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Apple 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 Apple Inc 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 Apple i.e., Apple and Walmart go up and down completely randomly.

Pair Corralation between Apple and Walmart

Given the investment horizon of 90 days Apple Inc is expected to generate 1.26 times more return on investment than Walmart. However, Apple is 1.26 times more volatile than Walmart. It trades about 0.04 of its potential returns per unit of risk. Walmart is currently generating about -0.01 per unit of risk. If you would invest  14,461  in Apple Inc on May 9, 2022 and sell it today you would earn a total of  2,074  from holding Apple Inc or generate 14.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Apple Inc  vs.  Walmart

 Performance (%) 
       Timeline  
Apple Inc 
Apple Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Apple Price Channel

Walmart 
Walmart Performance
0 of 100
Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in September 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Walmart Price Channel

Apple and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apple and Walmart

The main advantage of trading using opposite Apple and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple Inc 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.
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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