Correlation Between Walmart and Bank First

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

Diversification Opportunities for Walmart and Bank First

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Walmart and Bank First is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bank First National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank First National 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 Bank First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank First National has no effect on the direction of Walmart i.e., Walmart and Bank First go up and down completely randomly.

Pair Corralation between Walmart and Bank First

Considering the 90-day investment horizon Walmart is expected to generate 4.43 times less return on investment than Bank First. But when comparing it to its historical volatility, Walmart is 1.07 times less risky than Bank First. It trades about 0.01 of its potential returns per unit of risk. Bank First National is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,179  in Bank First National on May 13, 2022 and sell it today you would earn a total of  1,499  from holding Bank First National or generate 24.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  Bank First National

 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 unsteady 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

Bank First National 
Bank First Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bank First National are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Bank First may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Bank First Price Channel

Walmart and Bank First Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Bank First

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

Bank First National

Pair trading matchups for Bank First

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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