Correlation Between Walmart and Lynas Rare
Can any of the company-specific risk be diversified away by investing in both Walmart and Lynas Rare 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 Lynas Rare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Lynas Rare Earths, you can compare the effects of market volatilities on Walmart and Lynas Rare 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 Lynas Rare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Lynas Rare.
Diversification Opportunities for Walmart and Lynas Rare
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Lynas is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Lynas Rare Earths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lynas Rare Earths 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 Lynas Rare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lynas Rare Earths has no effect on the direction of Walmart i.e., Walmart and Lynas Rare go up and down completely randomly.
Pair Corralation between Walmart and Lynas Rare
Considering the 90-day investment horizon Walmart is expected to generate 0.54 times more return on investment than Lynas Rare. However, Walmart is 1.86 times less risky than Lynas Rare. It trades about 0.39 of its potential returns per unit of risk. Lynas Rare Earths is currently generating about -0.26 per unit of risk. If you would invest 9,143 in Walmart on November 5, 2024 and sell it today you would earn a total of 673.00 from holding Walmart or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Lynas Rare Earths
Performance |
| Timeline |
| Walmart |
| Lynas Rare Earths |
Walmart and Lynas Rare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Lynas Rare
The main advantage of trading using opposite Walmart and Lynas Rare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Lynas Rare 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 Lynas Rare will offset losses from the drop in Lynas Rare's 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 Stocks Directory module to find actively traded stocks across global markets.
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