Correlation Between Walmart and BonTerra Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and BonTerra Resources 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 BonTerra Resources 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 BonTerra Resources, you can compare the effects of market volatilities on Walmart and BonTerra Resources 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 BonTerra Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and BonTerra Resources.
Diversification Opportunities for Walmart and BonTerra Resources
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and BonTerra is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and BonTerra Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BonTerra Resources 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 BonTerra Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BonTerra Resources has no effect on the direction of Walmart i.e., Walmart and BonTerra Resources go up and down completely randomly.
Pair Corralation between Walmart and BonTerra Resources
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.31 times more return on investment than BonTerra Resources. However, Walmart Inc CDR is 3.21 times less risky than BonTerra Resources. It trades about 0.49 of its potential returns per unit of risk. BonTerra Resources is currently generating about -0.12 per unit of risk. If you would invest 3,557 in Walmart Inc CDR on August 30, 2024 and sell it today you would earn a total of 439.00 from holding Walmart Inc CDR or generate 12.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart Inc CDR vs. BonTerra Resources
Performance |
| Timeline |
| Walmart Inc CDR |
| BonTerra Resources |
Walmart and BonTerra Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and BonTerra Resources
The main advantage of trading using opposite Walmart and BonTerra Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, BonTerra Resources 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 BonTerra Resources will offset losses from the drop in BonTerra Resources' long position.| Walmart vs. Alaska Energy Metals | Walmart vs. Chatham Rock Phosphate | Walmart vs. Elixxer | Walmart vs. Cielo Waste Solutions |
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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 the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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