Correlation Between Walmart and Thermal Energy
Can any of the company-specific risk be diversified away by investing in both Walmart and Thermal 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 Thermal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Thermal Energy International, you can compare the effects of market volatilities on Walmart and Thermal 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 Thermal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Thermal Energy.
Diversification Opportunities for Walmart and Thermal Energy
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Walmart and Thermal is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Thermal Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermal Energy Inter 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 Thermal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermal Energy Inter has no effect on the direction of Walmart i.e., Walmart and Thermal Energy go up and down completely randomly.
Pair Corralation between Walmart and Thermal Energy
Considering the 90-day investment horizon Walmart is expected to generate 0.19 times more return on investment than Thermal Energy. However, Walmart is 5.34 times less risky than Thermal Energy. It trades about 0.52 of its potential returns per unit of risk. Thermal Energy International is currently generating about 0.03 per unit of risk. If you would invest 8,245 in Walmart on September 4, 2024 and sell it today you would earn a total of 1,019 from holding Walmart or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Walmart vs. Thermal Energy International
Performance |
| Timeline |
| Walmart |
| Thermal Energy Inter |
Walmart and Thermal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Thermal Energy
The main advantage of trading using opposite Walmart and Thermal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Thermal 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 Thermal Energy will offset losses from the drop in Thermal Energy's long position.| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
| Thermal Energy vs. TOMI Environmental Solutions | Thermal Energy vs. SCOR PK | Thermal Energy vs. HUMANA INC | Thermal Energy vs. Aquagold International |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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