Correlation Between Walmart and Karoon Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Karoon 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 Karoon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Karoon Energy, you can compare the effects of market volatilities on Walmart and Karoon 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 Karoon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Karoon Energy.
Diversification Opportunities for Walmart and Karoon Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Karoon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon 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 Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of Walmart i.e., Walmart and Karoon Energy go up and down completely randomly.
Pair Corralation between Walmart and Karoon Energy
Considering the 90-day investment horizon Walmart is expected to generate 0.35 times more return on investment than Karoon Energy. However, Walmart is 2.86 times less risky than Karoon Energy. It trades about 0.23 of its potential returns per unit of risk. Karoon Energy is currently generating about -0.02 per unit of risk. If you would invest 6,690 in Walmart on September 3, 2024 and sell it today you would earn a total of 2,560 from holding Walmart or generate 38.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Walmart vs. Karoon Energy
Performance |
| Timeline |
| Walmart |
| Karoon Energy |
Walmart and Karoon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Karoon Energy
The main advantage of trading using opposite Walmart and Karoon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Karoon 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 Karoon Energy will offset losses from the drop in Karoon Energy's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| Karoon Energy vs. CNX Resources Corp | Karoon Energy vs. MV Oil Trust | Karoon Energy vs. San Juan Basin | Karoon Energy vs. VOC Energy Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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