Correlation Between Walmart and Volcanic Gold
Can any of the company-specific risk be diversified away by investing in both Walmart and Volcanic 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 Volcanic 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 Volcanic Gold Mines, you can compare the effects of market volatilities on Walmart and Volcanic 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 Volcanic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Volcanic Gold.
Diversification Opportunities for Walmart and Volcanic Gold
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Volcanic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Volcanic Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcanic Gold Mines 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 Volcanic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcanic Gold Mines has no effect on the direction of Walmart i.e., Walmart and Volcanic Gold go up and down completely randomly.
Pair Corralation between Walmart and Volcanic Gold
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.12 times more return on investment than Volcanic Gold. However, Walmart Inc CDR is 8.06 times less risky than Volcanic Gold. It trades about 0.15 of its potential returns per unit of risk. Volcanic Gold Mines is currently generating about 0.01 per unit of risk. If you would invest 2,235 in Walmart Inc CDR on September 2, 2024 and sell it today you would earn a total of 1,802 from holding Walmart Inc CDR or generate 80.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Volcanic Gold Mines
Performance |
| Timeline |
| Walmart Inc CDR |
| Volcanic Gold Mines |
Walmart and Volcanic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Volcanic Gold
The main advantage of trading using opposite Walmart and Volcanic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Volcanic 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 Volcanic Gold will offset losses from the drop in Volcanic Gold's long position.| Walmart vs. Amazon CDR | Walmart vs. Berkshire Hathaway CDR | Walmart vs. UnitedHealth Group CDR | Walmart vs. Apple Inc CDR |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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