Correlation Between Vipshop Holdings and Walmart
Can any of the company-specific risk be diversified away by investing in both Vipshop Holdings 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 Vipshop Holdings and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vipshop Holdings Limited and Walmart, you can compare the effects of market volatilities on Vipshop Holdings 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 Vipshop Holdings with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vipshop Holdings and Walmart.
Diversification Opportunities for Vipshop Holdings and Walmart
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vipshop and Walmart is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vipshop Holdings Limited and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Vipshop Holdings 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 Vipshop Holdings Limited 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 Vipshop Holdings i.e., Vipshop Holdings and Walmart go up and down completely randomly.
Pair Corralation between Vipshop Holdings and Walmart
Given the investment horizon of 90 days Vipshop Holdings is expected to generate 5.28 times less return on investment than Walmart. In addition to that, Vipshop Holdings is 2.73 times more volatile than Walmart. It trades about 0.01 of its total potential returns per unit of risk. Walmart is currently generating about 0.08 per unit of volatility. If you would invest 5,123 in Walmart on January 24, 2024 and sell it today you would earn a total of 891.00 from holding Walmart or generate 17.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Vipshop Holdings Limited vs. Walmart
Performance |
Timeline |
Vipshop Holdings |
Walmart |
Vipshop Holdings and Walmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vipshop Holdings and Walmart
The main advantage of trading using opposite Vipshop Holdings and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vipshop Holdings 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.Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
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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 the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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