# Correlation Between ETF Series and Walmart

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Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Walmart, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Walmart.

## Diversification Opportunities for ETF Series and Walmart

 0.8 Correlation Coefficient

### Very poor diversification

The 3 months correlation between ETF and Walmart is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and ETF Series 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 ETF Series Solutions 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 ETF Series i.e., ETF Series and Walmart go up and down completely randomly.

## Pair Corralation between ETF Series and Walmart

Given the investment horizon of 90 days ETF Series Solutions is expected to generate 0.18 times more return on investment than Walmart. However, ETF Series Solutions is 5.69 times less risky than Walmart. It trades about 0.15 of its potential returns per unit of risk. Walmart is currently generating about -0.01 per unit of risk. If you would invest  2,410  in ETF Series Solutions on March 3, 2023 and sell it today you would earn a total of  71.00  from holding ETF Series Solutions or generate 2.95% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Strong Accuracy 100.0% Values Daily Returns

## ETF Series Solutions  vs.  Walmart

 Performance (%)
 Timeline
 ETF Series Solutions Correlation Profile

### 9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, ETF Series is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
 Performance Backtest Predict
 Walmart Correlation Profile

### 9 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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.
 Performance Backtest Predict

## ETF Series and Walmart Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with ETF Series and Walmart

The main advantage of trading using opposite ETF Series and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.
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The idea behind ETF Series Solutions 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.
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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