Correlation Between Walmart and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Walmart and Big Ridge 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 Big Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Big Ridge Gold, you can compare the effects of market volatilities on Walmart and Big Ridge 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 Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Big Ridge.
Diversification Opportunities for Walmart and Big Ridge
Very good diversification
The 3 months correlation between Walmart and Big is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold 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 are associated (or correlated) with Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Walmart i.e., Walmart and Big Ridge go up and down completely randomly.
Pair Corralation between Walmart and Big Ridge
Considering the 90-day investment horizon Walmart is expected to generate 2.38 times less return on investment than Big Ridge. But when comparing it to its historical volatility, Walmart is 8.74 times less risky than Big Ridge. It trades about 0.13 of its potential returns per unit of risk. Big Ridge Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Big Ridge Gold on November 27, 2024 and sell it today you would lose (4.20) from holding Big Ridge Gold or give up 42.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Big Ridge Gold
Performance |
| Timeline |
| Walmart |
| Big Ridge Gold |
Walmart and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Big Ridge
The main advantage of trading using opposite Walmart and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge's long position.| Walmart vs. Target | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Big Ridge vs. Minnova Corp | Big Ridge vs. Argo Gold | Big Ridge vs. Advance Gold Corp | Big Ridge vs. Blue Star Gold |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |