Correlation Between Walmart and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Walmart and Chevron Corp 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 Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Chevron Corp CEDEAR, you can compare the effects of market volatilities on Walmart and Chevron Corp 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 Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Chevron Corp.
Diversification Opportunities for Walmart and Chevron Corp
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Walmart and Chevron is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Chevron Corp CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp CEDEAR 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 Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp CEDEAR has no effect on the direction of Walmart i.e., Walmart and Chevron Corp go up and down completely randomly.
Pair Corralation between Walmart and Chevron Corp
Assuming the 90 days trading horizon Walmart is expected to generate 0.94 times more return on investment than Chevron Corp. However, Walmart is 1.07 times less risky than Chevron Corp. It trades about 0.11 of its potential returns per unit of risk. Chevron Corp CEDEAR is currently generating about -0.01 per unit of risk. If you would invest 560,000 in Walmart on November 2, 2024 and sell it today you would earn a total of 85,000 from holding Walmart or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Chevron Corp CEDEAR
Performance |
| Timeline |
| Walmart |
| Chevron Corp CEDEAR |
Walmart and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Chevron Corp
The main advantage of trading using opposite Walmart and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.| Walmart vs. Compania de Transporte | Walmart vs. Agrometal SAI | Walmart vs. Harmony Gold Mining | Walmart vs. Telecom Argentina |
| Chevron Corp vs. Agrometal SAI | Chevron Corp vs. United States Steel | Chevron Corp vs. Capex SA | Chevron Corp vs. Pfizer Inc |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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