Correlation Between Walmart and Norsemont Mining
Can any of the company-specific risk be diversified away by investing in both Walmart and Norsemont Mining 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 Norsemont Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Norsemont Mining, you can compare the effects of market volatilities on Walmart and Norsemont Mining 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 Norsemont Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Norsemont Mining.
Diversification Opportunities for Walmart and Norsemont Mining
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Walmart and Norsemont is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining 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 Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Walmart i.e., Walmart and Norsemont Mining go up and down completely randomly.
Pair Corralation between Walmart and Norsemont Mining
Considering the 90-day investment horizon Walmart is expected to generate 4.41 times less return on investment than Norsemont Mining. But when comparing it to its historical volatility, Walmart is 11.38 times less risky than Norsemont Mining. It trades about 0.15 of its potential returns per unit of risk. Norsemont Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Norsemont Mining on September 2, 2024 and sell it today you would earn a total of 1.00 from holding Norsemont Mining or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Norsemont Mining
Performance |
| Timeline |
| Walmart |
| Norsemont Mining |
Walmart and Norsemont Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Norsemont Mining
The main advantage of trading using opposite Walmart and Norsemont Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Norsemont Mining 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 Norsemont Mining will offset losses from the drop in Norsemont Mining'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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