Correlation Between Walmart and Emera Pref
Can any of the company-specific risk be diversified away by investing in both Walmart and Emera Pref 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 Emera Pref 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 Emera Pref A, you can compare the effects of market volatilities on Walmart and Emera Pref 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 Emera Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Emera Pref.
Diversification Opportunities for Walmart and Emera Pref
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Walmart and Emera is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Emera Pref A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emera Pref A 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 Emera Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emera Pref A has no effect on the direction of Walmart i.e., Walmart and Emera Pref go up and down completely randomly.
Pair Corralation between Walmart and Emera Pref
Assuming the 90 days trading horizon Walmart is expected to generate 10.85 times less return on investment than Emera Pref. In addition to that, Walmart is 1.07 times more volatile than Emera Pref A. It trades about 0.05 of its total potential returns per unit of risk. Emera Pref A is currently generating about 0.55 per unit of volatility. If you would invest 1,615 in Emera Pref A on October 25, 2024 and sell it today you would earn a total of 145.00 from holding Emera Pref A or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Emera Pref A
Performance |
| Timeline |
| Walmart Inc CDR |
| Emera Pref A |
Walmart and Emera Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Emera Pref
The main advantage of trading using opposite Walmart and Emera Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Emera Pref 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 Emera Pref will offset losses from the drop in Emera Pref's long position.| Walmart vs. XXIX Metal Corp | Walmart vs. Pace Metals | Walmart vs. Globex Mining Enterprises | Walmart vs. Lion One Metals |
| Emera Pref vs. Mako Mining Corp | Emera Pref vs. Rocky Mountain Liquor | Emera Pref vs. T2 Metals Corp | Emera Pref vs. Magna Mining |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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