Correlation Between Canadian Utilities and Walmart
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities 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 Canadian Utilities and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Ltd and Walmart Inc CDR, you can compare the effects of market volatilities on Canadian Utilities 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 Canadian Utilities with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and Walmart.
Diversification Opportunities for Canadian Utilities and Walmart
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Canadian and Walmart is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Ltd and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Canadian Utilities 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 Canadian Utilities Ltd 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 Inc CDR has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and Walmart go up and down completely randomly.
Pair Corralation between Canadian Utilities and Walmart
Assuming the 90 days trading horizon Canadian Utilities is expected to generate 4.71 times less return on investment than Walmart. But when comparing it to its historical volatility, Canadian Utilities Ltd is 1.19 times less risky than Walmart. It trades about 0.06 of its potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,876 in Walmart Inc CDR on September 1, 2024 and sell it today you would earn a total of 1,161 from holding Walmart Inc CDR or generate 40.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Canadian Utilities Ltd vs. Walmart Inc CDR
Performance |
| Timeline |
| Canadian Utilities |
| Walmart Inc CDR |
Canadian Utilities and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and Walmart
The main advantage of trading using opposite Canadian Utilities and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities 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.| Canadian Utilities vs. Altair Resources | Canadian Utilities vs. Arizona Metals Corp | Canadian Utilities vs. DRI Healthcare Trust | Canadian Utilities vs. Talon Metals Corp |
| Walmart vs. Amazon CDR | Walmart vs. Berkshire Hathaway CDR | Walmart vs. UnitedHealth Group CDR | Walmart vs. Apple Inc CDR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |