Correlation Between GOLD ROAD and Walmart
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Walmart, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Walmart.
Diversification Opportunities for GOLD ROAD and Walmart
Poor diversification
The 3 months correlation between GOLD and Walmart is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and GOLD ROAD 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 GOLD ROAD RES 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 GOLD ROAD i.e., GOLD ROAD and Walmart go up and down completely randomly.
Pair Corralation between GOLD ROAD and Walmart
Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 2.52 times more return on investment than Walmart. However, GOLD ROAD is 2.52 times more volatile than Walmart. It trades about 0.18 of its potential returns per unit of risk. Walmart is currently generating about 0.38 per unit of risk. If you would invest 109.00 in GOLD ROAD RES on September 20, 2024 and sell it today you would earn a total of 13.00 from holding GOLD ROAD RES or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLD ROAD RES vs. Walmart
Performance |
| Timeline |
| GOLD ROAD RES |
| Walmart |
GOLD ROAD and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Walmart
The main advantage of trading using opposite GOLD ROAD and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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.The idea behind GOLD ROAD RES 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.| Walmart vs. Kaufman Broad SA | Walmart vs. Corporate Travel Management | Walmart vs. Liberty Broadband | Walmart vs. GOLD ROAD RES |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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