Correlation Between Walmart and Capricorn Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Capricorn 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 Capricorn Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Capricorn Energy PLC, you can compare the effects of market volatilities on Walmart and Capricorn 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 Capricorn Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Capricorn Energy.
Diversification Opportunities for Walmart and Capricorn Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Capricorn is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Capricorn Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Energy PLC 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 Capricorn Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Energy PLC has no effect on the direction of Walmart i.e., Walmart and Capricorn Energy go up and down completely randomly.
Pair Corralation between Walmart and Capricorn Energy
Considering the 90-day investment horizon Walmart is expected to generate 2.53 times less return on investment than Capricorn Energy. But when comparing it to its historical volatility, Walmart is 8.41 times less risky than Capricorn Energy. It trades about 0.13 of its potential returns per unit of risk. Capricorn Energy PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 612.00 in Capricorn Energy PLC on August 29, 2024 and sell it today you would lose (42.00) from holding Capricorn Energy PLC or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.33% |
| Values | Daily Returns |
Walmart vs. Capricorn Energy PLC
Performance |
| Timeline |
| Walmart |
| Capricorn Energy PLC |
Walmart and Capricorn Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Capricorn Energy
The main advantage of trading using opposite Walmart and Capricorn Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Capricorn 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 Capricorn Energy will offset losses from the drop in Capricorn Energy's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Capricorn Energy vs. San Leon Energy | Capricorn Energy vs. Tullow Oil PLC | Capricorn Energy vs. Dno ASA | Capricorn Energy vs. PetroShale |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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