Correlation Between Walmart and Fortuna Silver

Can any of the company-specific risk be diversified away by investing in both Walmart and Fortuna Silver 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 Fortuna Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and Fortuna Silver Mines, you can compare the effects of market volatilities on Walmart and Fortuna Silver 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 Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Fortuna Silver.

Diversification Opportunities for Walmart and Fortuna Silver

0.38

Correlation Coefficient

Walmart  Fortuna Silver

Weak diversification

The 3 months correlation between Walmart and Fortuna is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Walmart i.e., Walmart and Fortuna Silver go up and down completely randomly.

Pair Corralation between Walmart and Fortuna Silver

Assuming the 90 days trading horizon Walmart is expected to generate 166.85 times less return on investment than Fortuna Silver. But when comparing it to its historical volatility, Walmart is 76.4 times less risky than Fortuna Silver. It trades about 0.13 of its potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Fortuna Silver Mines on December 24, 2024 and sell it today you would earn a total of  248.00  from holding Fortuna Silver Mines or generate 39.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	56.45%
Values	Daily Returns

Walmart  vs.  Fortuna Silver Mines

Walmart

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fortuna Silver Mines

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fortuna Silver unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Fortuna Silver

The main advantage of trading using opposite Walmart and Fortuna Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Fortuna Silver 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 Fortuna Silver will offset losses from the drop in Fortuna Silver's long position.

The idea behind Walmart and Fortuna Silver Mines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.