Correlation Between Walmart and Arhaus

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

By analyzing existing cross correlation between Walmart and Arhaus Inc, you can compare the effects of market volatilities on Walmart and Arhaus 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 Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Arhaus.

Diversification Opportunities for Walmart and Arhaus

-0.63

Correlation Coefficient

Walmart  Arhaus

Excellent diversification

The 3 months correlation between Walmart and Arhaus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Walmart i.e., Walmart and Arhaus go up and down completely randomly.

Pair Corralation between Walmart and Arhaus

Considering the 90-day investment horizon Walmart is expected to generate 0.3 times more return on investment than Arhaus. However, Walmart is 3.37 times less risky than Arhaus. It trades about 0.11 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.02 per unit of risk. If you would invest  4,973  in Walmart on August 19, 2024 and sell it today you would earn a total of  3,452  from holding Walmart or generate 69.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Walmart  vs.  Arhaus Inc

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Arhaus Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arhaus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Walmart and Arhaus

The main advantage of trading using opposite Walmart and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.

The idea behind Walmart and Arhaus Inc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.