Correlation Between Walmart and Apple

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

Diversification Opportunities for Walmart and Apple

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Walmart and Apple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Walmart i.e., Walmart and Apple go up and down completely randomly.

Pair Corralation between Walmart and Apple

Considering the 90-day investment horizon Walmart is expected to under-perform the Apple. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 1.25 times less risky than Apple. The stock trades about -0.03 of its potential returns per unit of risk. The Apple Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,028  in Apple Inc on May 12, 2022 and sell it today you would earn a total of  1,896  from holding Apple Inc or generate 12.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  Apple Inc

 Performance (%) 
       Timeline  
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 latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Walmart Price Channel

Apple Inc 
Apple Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Apple revealed solid returns over the last few months and may actually be approaching a breakup point.

Apple Price Channel

Walmart and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Apple

The main advantage of trading using opposite Walmart and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind Walmart and Apple Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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