Correlation Between Walmart and Wesdome Gold
Can any of the company-specific risk be diversified away by investing in both Walmart and Wesdome 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 Wesdome 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 Wesdome Gold Mines, you can compare the effects of market volatilities on Walmart and Wesdome 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 Wesdome Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Wesdome Gold.
Diversification Opportunities for Walmart and Wesdome Gold
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Wesdome is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Wesdome Gold Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesdome 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 Wesdome Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesdome Gold Mines has no effect on the direction of Walmart i.e., Walmart and Wesdome Gold go up and down completely randomly.
Pair Corralation between Walmart and Wesdome Gold
Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.39 times more return on investment than Wesdome Gold. However, Walmart Inc CDR is 2.59 times less risky than Wesdome Gold. It trades about 0.36 of its potential returns per unit of risk. Wesdome Gold Mines is currently generating about -0.11 per unit of risk. If you would invest 3,617 in Walmart Inc CDR on August 25, 2024 and sell it today you would earn a total of 318.00 from holding Walmart Inc CDR or generate 8.79% 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. Wesdome Gold Mines
Performance |
| Timeline |
| Walmart Inc CDR |
| Wesdome Gold Mines |
Walmart and Wesdome Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Wesdome Gold
The main advantage of trading using opposite Walmart and Wesdome Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Wesdome 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 Wesdome Gold will offset losses from the drop in Wesdome Gold's long position.| Walmart vs. Chatham Rock Phosphate | Walmart vs. Alaska Energy Metals | Walmart vs. Elixxer | Walmart vs. Cielo Waste Solutions |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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