Correlation Between Walmart and CITIC Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and CITIC 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 CITIC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and CITIC Resources Holdings, you can compare the effects of market volatilities on Walmart and CITIC 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 CITIC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and CITIC Resources.
Diversification Opportunities for Walmart and CITIC Resources
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and CITIC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and CITIC Resources Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC Resources Holdings 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 CITIC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC Resources Holdings has no effect on the direction of Walmart i.e., Walmart and CITIC Resources go up and down completely randomly.
Pair Corralation between Walmart and CITIC Resources
Considering the 90-day investment horizon Walmart is expected to generate 2.62 times less return on investment than CITIC Resources. But when comparing it to its historical volatility, Walmart is 8.89 times less risky than CITIC Resources. It trades about 0.13 of its potential returns per unit of risk. CITIC Resources Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.13 in CITIC Resources Holdings on September 2, 2024 and sell it today you would lose (0.13) from holding CITIC Resources Holdings or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 30.85% |
| Values | Daily Returns |
Walmart vs. CITIC Resources Holdings
Performance |
| Timeline |
| Walmart |
| CITIC Resources Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Walmart and CITIC Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and CITIC Resources
The main advantage of trading using opposite Walmart and CITIC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, CITIC 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 CITIC Resources will offset losses from the drop in CITIC Resources' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| CITIC Resources vs. Sherritt International | CITIC Resources vs. Metals X Limited | CITIC Resources vs. Interra Copper Corp | CITIC Resources vs. Anglo American PLC |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |