Correlation Between Wal Mart and GALENA MINING

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

By analyzing existing cross correlation between Wal Mart de Mxico and GALENA MINING LTD, you can compare the effects of market volatilities on Wal Mart and GALENA 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 Wal Mart with a short position of GALENA MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and GALENA MINING.

Diversification Opportunities for Wal Mart and GALENA MINING

0.0

Correlation Coefficient

Wal Mart  GALENA MINING

Pay attention - limited upside

The 3 months correlation between Wal and GALENA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and GALENA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALENA MINING LTD and Wal Mart 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 Wal Mart de Mxico are associated (or correlated) with GALENA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALENA MINING LTD has no effect on the direction of Wal Mart i.e., Wal Mart and GALENA MINING go up and down completely randomly.

Pair Corralation between Wal Mart and GALENA MINING

Assuming the 90 days trading horizon Wal Mart de Mxico is expected to generate 0.71 times more return on investment than GALENA MINING. However, Wal Mart de Mxico is 1.42 times less risky than GALENA MINING. It trades about 0.06 of its potential returns per unit of risk. GALENA MINING LTD is currently generating about -0.02 per unit of risk. If you would invest  104.00  in Wal Mart de Mxico on October 9, 2024 and sell it today you would earn a total of  156.00  from holding Wal Mart de Mxico or generate 150.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.81%
Values	Daily Returns

Wal Mart de Mxico  vs.  GALENA MINING LTD

Wal Mart de

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Wal Mart reported solid returns over the last few months and may actually be approaching a breakup point.

GALENA MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GALENA MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GALENA MINING is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Wal Mart and GALENA MINING

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

The idea behind Wal Mart de Mxico and GALENA MINING LTD 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.