Correlation Between Walmart and Vipshop Holdings
Can any of the company-specific risk be diversified away by investing in both Walmart and Vipshop Holdings 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 Vipshop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Vipshop Holdings Limited, you can compare the effects of market volatilities on Walmart and Vipshop Holdings 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 Vipshop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Vipshop Holdings.
Diversification Opportunities for Walmart and Vipshop Holdings
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Vipshop is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Vipshop Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vipshop Holdings 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 Vipshop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vipshop Holdings has no effect on the direction of Walmart i.e., Walmart and Vipshop Holdings go up and down completely randomly.
Pair Corralation between Walmart and Vipshop Holdings
Considering the 90-day investment horizon Walmart is expected to generate 0.29 times more return on investment than Vipshop Holdings. However, Walmart is 3.49 times less risky than Vipshop Holdings. It trades about -0.05 of its potential returns per unit of risk. Vipshop Holdings Limited is currently generating about -0.12 per unit of risk. If you would invest 6,057 in Walmart on January 24, 2024 and sell it today you would lose (43.00) from holding Walmart or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Vipshop Holdings Limited
Performance |
| Timeline |
| Walmart |
| Vipshop Holdings |
Walmart and Vipshop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Vipshop Holdings
The main advantage of trading using opposite Walmart and Vipshop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Vipshop Holdings 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 Vipshop Holdings will offset losses from the drop in Vipshop Holdings' long position.| Walmart vs. Big Lots | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Vipshop Holdings vs. Appian Corp | Vipshop Holdings vs. Okta Inc | Vipshop Holdings vs. MongoDB | Vipshop Holdings vs. Twilio Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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