Correlation Between Walmart and Anfield Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and Anfield Resources 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 Anfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Anfield Resources, you can compare the effects of market volatilities on Walmart and Anfield Resources 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 Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Anfield Resources.
Diversification Opportunities for Walmart and Anfield Resources
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Anfield is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources 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 Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Walmart i.e., Walmart and Anfield Resources go up and down completely randomly.
Pair Corralation between Walmart and Anfield Resources
Considering the 90-day investment horizon Walmart is expected to generate 3.99 times less return on investment than Anfield Resources. But when comparing it to its historical volatility, Walmart is 8.72 times less risky than Anfield Resources. It trades about 0.12 of its potential returns per unit of risk. Anfield Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Anfield Resources on August 25, 2024 and sell it today you would earn a total of 3.50 from holding Anfield Resources or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Walmart vs. Anfield Resources
Performance |
| Timeline |
| Walmart |
| Anfield Resources |
Walmart and Anfield Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Anfield Resources
The main advantage of trading using opposite Walmart and Anfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Anfield Resources 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 Anfield Resources will offset losses from the drop in Anfield Resources' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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