Correlation Between Walmart and Bar Harbor

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

Diversification Opportunities for Walmart and Bar Harbor

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Walmart and Bar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares 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 Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Walmart i.e., Walmart and Bar Harbor go up and down completely randomly.

Pair Corralation between Walmart and Bar Harbor

Considering the 90-day investment horizon Walmart is expected to generate 0.43 times more return on investment than Bar Harbor. However, Walmart is 2.32 times less risky than Bar Harbor. It trades about 0.09 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.02 per unit of risk. If you would invest  4,885  in Walmart on December 29, 2023 and sell it today you would earn a total of  1,154  from holding Walmart or generate 23.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

Walmart  vs.  Bar Harbor Bankshares

 Performance 
       Timeline  
Walmart 

Risk-Adjusted Performance

22 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 22 (%) 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.
Bar Harbor Bankshares 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Bar Harbor Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Walmart and Bar Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Bar Harbor

The main advantage of trading using opposite Walmart and Bar Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Bar Harbor 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 Bar Harbor will offset losses from the drop in Bar Harbor's long position.
The idea behind Walmart and Bar Harbor Bankshares 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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