Correlation Between Walmart and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Walmart and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Harmony Gold Mining, you can compare the effects of market volatilities on Walmart and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Harmony Gold.
Diversification Opportunities for Walmart and Harmony Gold
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walmart and Harmony is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Walmart i.e., Walmart and Harmony Gold go up and down completely randomly.
Pair Corralation between Walmart and Harmony Gold
Considering the 90-day investment horizon Walmart is expected to generate 0.25 times more return on investment than Harmony Gold. However, Walmart is 4.02 times less risky than Harmony Gold. It trades about 0.39 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.21 per unit of risk. If you would invest 8,275 in Walmart on August 29, 2024 and sell it today you would earn a total of 856.00 from holding Walmart or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Walmart vs. Harmony Gold Mining
Performance |
| Timeline |
| Walmart |
| Harmony Gold Mining |
Walmart and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Harmony Gold
The main advantage of trading using opposite Walmart and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Harmony Gold vs. Vertiv Holdings Co | Harmony Gold vs. Nasdaq Inc | Harmony Gold vs. McDonalds | Harmony Gold vs. Walmart |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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