Correlation Between Income Fund and Walmart

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

Diversification Opportunities for Income Fund and Walmart

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Income and Walmart is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding INCOME FUND OF and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Income Fund 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 Income Fund Of 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 Income Fund i.e., Income Fund and Walmart go up and down completely randomly.

Pair Corralation between Income Fund and Walmart

Assuming the 90 days horizon Income Fund Of is expected to generate 0.62 times more return on investment than Walmart. However, Income Fund Of is 1.62 times less risky than Walmart. It trades about 0.38 of its potential returns per unit of risk. Walmart is currently generating about 0.14 per unit of risk. If you would invest  2,336  in Income Fund Of on December 29, 2023 and sell it today you would earn a total of  86.00  from holding Income Fund Of or generate 3.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

INCOME FUND OF  vs.  Walmart

 Performance 
       Timeline  
Income Fund 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Income Fund Of are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Income Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Walmart 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Income Fund and Walmart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Income Fund and Walmart

The main advantage of trading using opposite Income Fund and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Fund 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 Income Fund Of 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 the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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