Correlation Between Walmart and Kesselrun Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and Kesselrun 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 Kesselrun 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 Kesselrun Resources, you can compare the effects of market volatilities on Walmart and Kesselrun 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 Kesselrun Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Kesselrun Resources.
Diversification Opportunities for Walmart and Kesselrun Resources
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Kesselrun is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Kesselrun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kesselrun 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 Kesselrun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kesselrun Resources has no effect on the direction of Walmart i.e., Walmart and Kesselrun Resources go up and down completely randomly.
Pair Corralation between Walmart and Kesselrun Resources
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.12 times more return on investment than Kesselrun Resources. However, Walmart Inc CDR is 8.03 times less risky than Kesselrun Resources. It trades about 0.23 of its potential returns per unit of risk. Kesselrun Resources is currently generating about 0.01 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 1,103 from holding Walmart Inc CDR or generate 37.59% 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. Kesselrun Resources
Performance |
| Timeline |
| Walmart Inc CDR |
| Kesselrun Resources |
Walmart and Kesselrun Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Kesselrun Resources
The main advantage of trading using opposite Walmart and Kesselrun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Kesselrun 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 Kesselrun Resources will offset losses from the drop in Kesselrun Resources' 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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