Correlation Between Walmart and Journey Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Journey 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 Journey Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Journey Energy, you can compare the effects of market volatilities on Walmart and Journey 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 Journey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Journey Energy.
Diversification Opportunities for Walmart and Journey Energy
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Journey is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Journey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Journey 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 Journey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Journey Energy has no effect on the direction of Walmart i.e., Walmart and Journey Energy go up and down completely randomly.
Pair Corralation between Walmart and Journey Energy
Considering the 90-day investment horizon Walmart is expected to generate 0.4 times more return on investment than Journey Energy. However, Walmart is 2.53 times less risky than Journey Energy. It trades about 0.54 of its potential returns per unit of risk. Journey Energy is currently generating about -0.02 per unit of risk. If you would invest 8,195 in Walmart on September 1, 2024 and sell it today you would earn a total of 1,055 from holding Walmart or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Journey Energy
Performance |
| Timeline |
| Walmart |
| Journey Energy |
Walmart and Journey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Journey Energy
The main advantage of trading using opposite Walmart and Journey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Journey 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 Journey Energy will offset losses from the drop in Journey Energy's long position.| Walmart vs. Ingles Markets Incorporated | Walmart vs. Sendas Distribuidora SA | Walmart vs. Grocery Outlet Holding | Walmart vs. Ocado Group plc |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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