Correlation Between Walmart and Disney

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

Diversification Opportunities for Walmart and Disney

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Walmart and Disney is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Walmart i.e., Walmart and Disney go up and down completely randomly.

Pair Corralation between Walmart and Disney

Considering the 90-day investment horizon Walmart is expected to generate 0.71 times more return on investment than Disney. However, Walmart is 1.41 times less risky than Disney. It trades about 0.01 of its potential returns per unit of risk. Walt Disney is currently generating about -0.04 per unit of risk. If you would invest  14,265  in Walmart on November 9, 2022 and sell it today you would lose (197.00)  from holding Walmart or give up 1.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  Walt Disney

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 1 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Walmart Price Channel

Walt Disney 
Disney Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Disney Price Channel

Walmart and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Disney

The main advantage of trading using opposite Walmart and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
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The idea behind Walmart and Walt Disney 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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