Correlation Between Walmart and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Cardinal Energy 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 Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Cardinal Energy, you can compare the effects of market volatilities on Walmart and Cardinal Energy 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 Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cardinal Energy.
Diversification Opportunities for Walmart and Cardinal Energy
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Cardinal is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy 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 Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Walmart i.e., Walmart and Cardinal Energy go up and down completely randomly.
Pair Corralation between Walmart and Cardinal Energy
Considering the 90-day investment horizon Walmart is expected to generate 0.81 times more return on investment than Cardinal Energy. However, Walmart is 1.24 times less risky than Cardinal Energy. It trades about 0.45 of its potential returns per unit of risk. Cardinal Energy is currently generating about -0.24 per unit of risk. If you would invest 9,000 in Walmart on November 3, 2024 and sell it today you would earn a total of 816.00 from holding Walmart or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Cardinal Energy
Performance |
| Timeline |
| Walmart |
| Cardinal Energy |
Walmart and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Cardinal Energy
The main advantage of trading using opposite Walmart and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Cardinal Energy 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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