Correlation Between Walmart and Westhaven Ventures
Can any of the company-specific risk be diversified away by investing in both Walmart and Westhaven Ventures 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 Westhaven Ventures 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 Westhaven Ventures, you can compare the effects of market volatilities on Walmart and Westhaven Ventures 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 Westhaven Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Westhaven Ventures.
Diversification Opportunities for Walmart and Westhaven Ventures
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Walmart and Westhaven is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Westhaven Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westhaven Ventures 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 Westhaven Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westhaven Ventures has no effect on the direction of Walmart i.e., Walmart and Westhaven Ventures go up and down completely randomly.
Pair Corralation between Walmart and Westhaven Ventures
Assuming the 90 days trading horizon Walmart is expected to generate 2.76 times less return on investment than Westhaven Ventures. But when comparing it to its historical volatility, Walmart Inc CDR is 9.56 times less risky than Westhaven Ventures. It trades about 0.54 of its potential returns per unit of risk. Westhaven Ventures is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 9.50 in Westhaven Ventures on November 9, 2024 and sell it today you would earn a total of 2.50 from holding Westhaven Ventures or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart Inc CDR vs. Westhaven Ventures
Performance |
| Timeline |
| Walmart Inc CDR |
| Westhaven Ventures |
Walmart and Westhaven Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Westhaven Ventures
The main advantage of trading using opposite Walmart and Westhaven Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Westhaven Ventures 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 Westhaven Ventures will offset losses from the drop in Westhaven Ventures' long position.| Walmart vs. Canlan Ice Sports | Walmart vs. Pace Metals | Walmart vs. Sun Peak Metals | Walmart vs. Gfl Environmental Holdings |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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