Correlation Between Walmart and Chesapeake Gold
Can any of the company-specific risk be diversified away by investing in both Walmart and Chesapeake Gold 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 Chesapeake Gold 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 Chesapeake Gold Corp, you can compare the effects of market volatilities on Walmart and Chesapeake Gold 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 Chesapeake Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Chesapeake Gold.
Diversification Opportunities for Walmart and Chesapeake Gold
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Chesapeake is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Chesapeake Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Gold 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 Chesapeake Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Gold Corp has no effect on the direction of Walmart i.e., Walmart and Chesapeake Gold go up and down completely randomly.
Pair Corralation between Walmart and Chesapeake Gold
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.23 times more return on investment than Chesapeake Gold. However, Walmart Inc CDR is 4.35 times less risky than Chesapeake Gold. It trades about 0.23 of its potential returns per unit of risk. Chesapeake Gold Corp is currently generating about -0.11 per unit of risk. If you would invest 2,934 in Walmart Inc CDR on September 3, 2024 and sell it today you would earn a total of 1,097 from holding Walmart Inc CDR or generate 37.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Chesapeake Gold Corp
Performance |
| Timeline |
| Walmart Inc CDR |
| Chesapeake Gold Corp |
Walmart and Chesapeake Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Chesapeake Gold
The main advantage of trading using opposite Walmart and Chesapeake Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Chesapeake Gold 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 Chesapeake Gold will offset losses from the drop in Chesapeake Gold's long position.| Walmart vs. Xtract One Technologies | Walmart vs. Enduro Metals Corp | Walmart vs. Wishpond Technologies | Walmart vs. Arbor Metals Corp |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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