Correlation Between Walmart and North Bay
Can any of the company-specific risk be diversified away by investing in both Walmart and North Bay 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 North Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and North Bay Resources, you can compare the effects of market volatilities on Walmart and North Bay 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 North Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and North Bay.
Diversification Opportunities for Walmart and North Bay
Excellent diversification
The 3 months correlation between Walmart and North is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and North Bay Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Bay Resources 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 North Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Bay Resources has no effect on the direction of Walmart i.e., Walmart and North Bay go up and down completely randomly.
Pair Corralation between Walmart and North Bay
Considering the 90-day investment horizon Walmart is expected to under-perform the North Bay. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 7.36 times less risky than North Bay. The stock trades about -0.06 of its potential returns per unit of risk. The North Bay Resources is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 0.08 in North Bay Resources on October 20, 2024 and sell it today you would earn a total of 0.02 from holding North Bay Resources or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. North Bay Resources
Performance |
| Timeline |
| Walmart |
| North Bay Resources |
Walmart and North Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and North Bay
The main advantage of trading using opposite Walmart and North Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, North Bay 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 North Bay will offset losses from the drop in North Bay's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Dollar General |
| North Bay vs. Diamond Fields Resources | North Bay vs. EnviroGold Global Limited | North Bay vs. Gemfields Group Limited | North Bay vs. Pacific Ridge Exploration |
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.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Correlations Find global opportunities by holding instruments from different markets |