Correlation Between Walmart and Defentect

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

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

Diversification Opportunities for Walmart and Defentect

-0.04

Correlation Coefficient

Walmart  Defentect

Good diversification

The 3 months correlation between Walmart and Defentect is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Defentect Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defentect Group 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 Defentect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defentect Group has no effect on the direction of Walmart i.e., Walmart and Defentect go up and down completely randomly.

Pair Corralation between Walmart and Defentect

Considering the 90-day investment horizon Walmart is expected to under-perform the Defentect. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 3.82 times less risky than Defentect. The stock trades about -0.01 of its potential returns per unit of risk. The Defentect Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.43  in Defentect Group on May 2, 2025 and sell it today you would earn a total of  0.00  from holding Defentect Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Walmart  vs.  Defentect Group

Walmart

Risk-Adjusted Performance

Weak

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

Defentect Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Defentect Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Defentect is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Walmart and Defentect

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

The idea behind Walmart and Defentect Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.