Correlation Between Walmart and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Walmart and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline Corp, you can compare the effects of market volatilities on Walmart and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Pembina Pipeline.
Diversification Opportunities for Walmart and Pembina Pipeline
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walmart and Pembina is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Walmart i.e., Walmart and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Walmart and Pembina Pipeline
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.94 times more return on investment than Pembina Pipeline. However, Walmart Inc CDR is 1.07 times less risky than Pembina Pipeline. It trades about 0.33 of its potential returns per unit of risk. Pembina Pipeline Corp is currently generating about -0.02 per unit of risk. If you would invest 3,605 in Walmart Inc CDR on August 28, 2024 and sell it today you would earn a total of 286.00 from holding Walmart Inc CDR or generate 7.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Walmart Inc CDR |
| Pembina Pipeline Corp |
Walmart and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Pembina Pipeline
The main advantage of trading using opposite Walmart and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Walmart vs. Ramp Metals | Walmart vs. Aya Gold Silver | Walmart vs. Lion One Metals | Walmart vs. Perseus Mining |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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