Correlation Between Walmart and Baytex Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Baytex Energy 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 Baytex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart Inc CDR and Baytex Energy Corp, you can compare the effects of market volatilities on Walmart and Baytex Energy 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 Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Baytex Energy.
Diversification Opportunities for Walmart and Baytex Energy
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Baytex is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp 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 Inc CDR are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Walmart i.e., Walmart and Baytex Energy go up and down completely randomly.
Pair Corralation between Walmart and Baytex Energy
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.44 times more return on investment than Baytex Energy. However, Walmart Inc CDR is 2.25 times less risky than Baytex Energy. It trades about 0.54 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.25 per unit of risk. If you would invest 3,982 in Walmart Inc CDR on November 9, 2024 and sell it today you would earn a total of 473.00 from holding Walmart Inc CDR or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Baytex Energy Corp
Performance |
| Timeline |
| Walmart Inc CDR |
| Baytex Energy Corp |
Walmart and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Baytex Energy
The main advantage of trading using opposite Walmart and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.| Walmart vs. Canlan Ice Sports | Walmart vs. Pace Metals | Walmart vs. Sun Peak Metals | Walmart vs. Gfl Environmental Holdings |
| Baytex Energy vs. MEG Energy Corp | Baytex Energy vs. Whitecap Resources | Baytex Energy vs. Athabasca Oil Corp | Baytex Energy vs. Cenovus Energy |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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