Correlation Between Walmart and BankUnited

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

Diversification Opportunities for Walmart and BankUnited

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Walmart and BankUnited is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and BankUnited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankUnited 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 BankUnited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankUnited has no effect on the direction of Walmart i.e., Walmart and BankUnited go up and down completely randomly.

Pair Corralation between Walmart and BankUnited

Considering the 90-day investment horizon Walmart is expected to generate 1.08 times less return on investment than BankUnited. In addition to that, Walmart is 1.19 times more volatile than BankUnited. It trades about 0.18 of its total potential returns per unit of risk. BankUnited is currently generating about 0.23 per unit of volatility. If you would invest  3,538  in BankUnited on May 20, 2022 and sell it today you would earn a total of  562.00  from holding BankUnited or generate 15.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  BankUnited

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart Price Channel

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

BankUnited Price Channel

Walmart and BankUnited Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and BankUnited

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

BankUnited

Pair trading matchups for BankUnited

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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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