Correlation Between Walmart and Trek Resources
Can any of the company-specific risk be diversified away by investing in both Walmart and Trek 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 Trek Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Trek Resources, you can compare the effects of market volatilities on Walmart and Trek 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 Trek Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Trek Resources.
Diversification Opportunities for Walmart and Trek Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Walmart and Trek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Trek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trek 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 Trek Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trek Resources has no effect on the direction of Walmart i.e., Walmart and Trek Resources go up and down completely randomly.
Pair Corralation between Walmart and Trek Resources
Considering the 90-day investment horizon Walmart is expected to generate 1.13 times less return on investment than Trek Resources. But when comparing it to its historical volatility, Walmart is 3.8 times less risky than Trek Resources. It trades about 0.15 of its potential returns per unit of risk. Trek Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 20,000 in Trek Resources on December 1, 2024 and sell it today you would earn a total of 17,500 from holding Trek Resources or generate 87.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Trek Resources
Performance |
| Timeline |
| Walmart |
| Trek Resources |
Walmart and Trek Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Trek Resources
The main advantage of trading using opposite Walmart and Trek Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Trek 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 Trek Resources will offset losses from the drop in Trek Resources' long position.| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
| Trek Resources vs. Questerre Energy | Trek Resources vs. Petrus Resources | Trek Resources vs. PetroShale | Trek Resources vs. Pieridae Energy Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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