Correlation Between Walmart and FTSE EM

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

Diversification Opportunities for Walmart and FTSE EM

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Walmart and FTSE EM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and FTSE EM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTSE EM ETF 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 FTSE EM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTSE EM ETF has no effect on the direction of Walmart i.e., Walmart and FTSE EM go up and down completely randomly.

Pair Corralation between Walmart and FTSE EM

Considering the 90-day investment horizon Walmart is expected to generate 1.11 times more return on investment than FTSE EM. However, Walmart is 1.11 times more volatile than FTSE EM ETF. It trades about 0.02 of its potential returns per unit of risk. FTSE EM ETF is currently generating about -0.02 per unit of risk. If you would invest  14,371  in Walmart on August 31, 2022 and sell it today you would earn a total of  926.00  from holding Walmart or generate 6.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  FTSE EM ETF

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Walmart Price Channel

FTSE EM ETF 
FTSE EM Performance
0 of 100
Over the last 90 days FTSE EM ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, FTSE EM is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FTSE EM Price Channel

Walmart and FTSE EM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and FTSE EM

The main advantage of trading using opposite Walmart and FTSE EM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, FTSE EM 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 FTSE EM will offset losses from the drop in FTSE EM's long position.
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The idea behind Walmart and FTSE EM ETF 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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