Correlation Between Walmart and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both Walmart and VanEck Oil 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 VanEck Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and VanEck Oil Refiners, you can compare the effects of market volatilities on Walmart and VanEck Oil 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 VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and VanEck Oil.
Diversification Opportunities for Walmart and VanEck Oil
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and VanEck is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and VanEck Oil Refiners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Refiners 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Refiners has no effect on the direction of Walmart i.e., Walmart and VanEck Oil go up and down completely randomly.
Pair Corralation between Walmart and VanEck Oil
Considering the 90-day investment horizon Walmart is expected to generate 1.12 times more return on investment than VanEck Oil. However, Walmart is 1.12 times more volatile than VanEck Oil Refiners. It trades about 0.23 of its potential returns per unit of risk. VanEck Oil Refiners is currently generating about -0.01 per unit of risk. If you would invest 5,033 in Walmart on September 2, 2024 and sell it today you would earn a total of 4,217 from holding Walmart or generate 83.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. VanEck Oil Refiners
Performance |
| Timeline |
| Walmart |
| VanEck Oil Refiners |
Walmart and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and VanEck Oil
The main advantage of trading using opposite Walmart and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, VanEck Oil 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 VanEck Oil will offset losses from the drop in VanEck Oil's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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