Correlation Between Walmart and Barnes Noble

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

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

Diversification Opportunities for Walmart and Barnes Noble

0.0

Correlation Coefficient

Walmart  Barnes Noble

Pay attention - limited upside

The 3 months correlation between Walmart and Barnes is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Barnes Noble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble 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 Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble has no effect on the direction of Walmart i.e., Walmart and Barnes Noble go up and down completely randomly.

Pair Corralation between Walmart and Barnes Noble

If you would invest (100.00) in Barnes Noble on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Barnes Noble or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Walmart  vs.  Barnes Noble

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 may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Barnes Noble

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and Barnes Noble

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

The idea behind Walmart and Barnes Noble 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.