Correlation Between Microsoft and WALMART

Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and WALMART into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and WALMART INC 5875, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and WALMART.

Diversification Opportunities for Microsoft and WALMART

0.15

Correlation Coefficient

Microsoft  WALMART

Average diversification

The 3 months correlation between Microsoft and WALMART is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and WALMART INC 5875 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 5875 and Microsoft 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 Microsoft 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 INC 5875 has no effect on the direction of Microsoft i.e., Microsoft and WALMART go up and down completely randomly.

Pair Corralation between Microsoft and WALMART

Given the investment horizon of 90 days Microsoft is expected to under-perform the WALMART. In addition to that, Microsoft is 2.35 times more volatile than WALMART INC 5875. It trades about -0.08 of its total potential returns per unit of risk. WALMART INC 5875 is currently generating about 0.23 per unit of volatility. If you would invest  10,328  in WALMART INC 5875 on August 5, 2025 and sell it today you would earn a total of  227.00  from holding WALMART INC 5875 or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Microsoft  vs.  WALMART INC 5875

Microsoft

Risk-Adjusted Performance

Weakest

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

WALMART INC 5875

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in WALMART INC 5875 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and WALMART

The main advantage of trading using opposite Microsoft and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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 Microsoft and WALMART INC 5875 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.