Correlation Between Walmart and Chorus Aviation
Can any of the company-specific risk be diversified away by investing in both Walmart and Chorus Aviation 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 Chorus Aviation 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 Chorus Aviation, you can compare the effects of market volatilities on Walmart and Chorus Aviation 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 Chorus Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Chorus Aviation.
Diversification Opportunities for Walmart and Chorus Aviation
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walmart and Chorus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Chorus Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chorus Aviation 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 Chorus Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chorus Aviation has no effect on the direction of Walmart i.e., Walmart and Chorus Aviation go up and down completely randomly.
Pair Corralation between Walmart and Chorus Aviation
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.43 times more return on investment than Chorus Aviation. However, Walmart Inc CDR is 2.31 times less risky than Chorus Aviation. It trades about 0.38 of its potential returns per unit of risk. Chorus Aviation is currently generating about 0.16 per unit of risk. If you would invest 3,605 in Walmart Inc CDR on August 29, 2024 and sell it today you would earn a total of 369.00 from holding Walmart Inc CDR or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Chorus Aviation
Performance |
| Timeline |
| Walmart Inc CDR |
| Chorus Aviation |
Walmart and Chorus Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Chorus Aviation
The main advantage of trading using opposite Walmart and Chorus Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Chorus Aviation 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 Chorus Aviation will offset losses from the drop in Chorus Aviation's long position.| Walmart vs. Nicola Mining | Walmart vs. Northstar Clean Technologies | Walmart vs. North American Construction | Walmart vs. Air Canada |
| Chorus Aviation vs. Cargojet | Chorus Aviation vs. Exchange Income | Chorus Aviation vs. Cineplex | Chorus Aviation vs. Transat AT |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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