Correlation Between Walmart and Kavango Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and Kavango 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 Kavango Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Kavango Resources Plc, you can compare the effects of market volatilities on Walmart and Kavango 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 Kavango Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Kavango Resources.
Diversification Opportunities for Walmart and Kavango Resources
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Kavango is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Kavango Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kavango Resources Plc 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 Kavango Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kavango Resources Plc has no effect on the direction of Walmart i.e., Walmart and Kavango Resources go up and down completely randomly.
Pair Corralation between Walmart and Kavango Resources
Considering the 90-day investment horizon Walmart is expected to generate 0.2 times more return on investment than Kavango Resources. However, Walmart is 5.11 times less risky than Kavango Resources. It trades about 0.53 of its potential returns per unit of risk. Kavango Resources Plc is currently generating about -0.35 per unit of risk. If you would invest 8,219 in Walmart on September 2, 2024 and sell it today you would earn a total of 1,031 from holding Walmart or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Kavango Resources Plc
Performance |
| Timeline |
| Walmart |
| Kavango Resources Plc |
Walmart and Kavango Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Kavango Resources
The main advantage of trading using opposite Walmart and Kavango Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Kavango 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 Kavango Resources will offset losses from the drop in Kavango Resources' long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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