Correlation Between Ollies Bargain and Walmart
Can any of the company-specific risk be diversified away by investing in both Ollies Bargain 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 Ollies Bargain and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ollies Bargain Outlet and Walmart, you can compare the effects of market volatilities on Ollies Bargain 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 Ollies Bargain with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ollies Bargain and Walmart.
Diversification Opportunities for Ollies Bargain and Walmart
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ollies and Walmart is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ollies Bargain Outlet and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Ollies Bargain 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 Ollies Bargain Outlet 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 Ollies Bargain i.e., Ollies Bargain and Walmart go up and down completely randomly.
Pair Corralation between Ollies Bargain and Walmart
Given the investment horizon of 90 days Ollies Bargain is expected to generate 1.04 times less return on investment than Walmart. In addition to that, Ollies Bargain is 2.19 times more volatile than Walmart. It trades about 0.04 of its total potential returns per unit of risk. Walmart is currently generating about 0.08 per unit of volatility. If you would invest 4,981 in Walmart on January 26, 2024 and sell it today you would earn a total of 1,006 from holding Walmart or generate 20.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Ollies Bargain Outlet vs. Walmart
Performance |
Timeline |
Ollies Bargain Outlet |
Walmart |
Ollies Bargain and Walmart Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ollies Bargain and Walmart
The main advantage of trading using opposite Ollies Bargain and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ollies Bargain 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.Ollies Bargain vs. PriceSmart | Ollies Bargain vs. BBB Foods | Ollies Bargain vs. Costco Wholesale Corp | Ollies Bargain vs. Wayfair |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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