Correlation Between Walmart and Gear Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Gear 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 Gear Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Gear Energy, you can compare the effects of market volatilities on Walmart and Gear 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 Gear Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Gear Energy.
Diversification Opportunities for Walmart and Gear Energy
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Gear is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Gear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gear 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 Gear Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gear Energy has no effect on the direction of Walmart i.e., Walmart and Gear Energy go up and down completely randomly.
Pair Corralation between Walmart and Gear Energy
Considering the 90-day investment horizon Walmart is expected to generate 0.53 times more return on investment than Gear Energy. However, Walmart is 1.88 times less risky than Gear Energy. It trades about 0.53 of its potential returns per unit of risk. Gear Energy is currently generating about 0.01 per unit of risk. If you would invest 8,139 in Walmart on August 31, 2024 and sell it today you would earn a total of 1,049 from holding Walmart or generate 12.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Gear Energy
Performance |
| Timeline |
| Walmart |
| Gear Energy |
Walmart and Gear Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Gear Energy
The main advantage of trading using opposite Walmart and Gear Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Gear 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 Gear Energy will offset losses from the drop in Gear Energy's long position.| Walmart vs. Dollar General | Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation |
| Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. MEG Energy Corp | Gear Energy vs. Cardinal Energy | Gear Energy vs. Whitecap Resources |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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