Correlation Between Constellium and Walmart

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

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

Diversification Opportunities for Constellium and Walmart

-0.45

Correlation Coefficient

Constellium  Walmart

Very good diversification

The 3 months correlation between Constellium and Walmart is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Constellium 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 Constellium Nv 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 Constellium i.e., Constellium and Walmart go up and down completely randomly.

Pair Corralation between Constellium and Walmart

Given the investment horizon of 90 days Constellium is expected to generate 1.13 times less return on investment than Walmart. In addition to that, Constellium is 2.25 times more volatile than Walmart. It trades about 0.05 of its total potential returns per unit of risk. Walmart is currently generating about 0.12 per unit of volatility. If you would invest  4,293  in Walmart on June 23, 2024 and sell it today you would earn a total of  3,613  from holding Walmart or generate 84.16% return on investment over 90 days.

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

Constellium Nv  vs.  Walmart

Constellium Nv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Constellium Nv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Walmart

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Constellium and Walmart

The main advantage of trading using opposite Constellium and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium 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 Constellium Nv and Walmart 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.