Correlation Between Precious Metals and Walmart

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

By analyzing existing cross correlation between Precious Metals And and Walmart Inc CDR, you can compare the effects of market volatilities on Precious Metals and Walmart 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 Precious Metals with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Walmart.

Diversification Opportunities for Precious Metals and Walmart

-0.53

Correlation Coefficient

Precious Metals  Walmart

Excellent diversification

The 3 months correlation between Precious and Walmart is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Precious Metals 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 Precious Metals And are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Precious Metals i.e., Precious Metals and Walmart go up and down completely randomly.

Pair Corralation between Precious Metals and Walmart

Assuming the 90 days trading horizon Precious Metals And is expected to under-perform the Walmart. In addition to that, Precious Metals is 1.87 times more volatile than Walmart Inc CDR. It trades about -0.02 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.17 per unit of volatility. If you would invest  3,609  in Walmart Inc CDR on October 24, 2024 and sell it today you would earn a total of  424.00  from holding Walmart Inc CDR or generate 11.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Precious Metals And  vs.  Walmart Inc CDR

Precious Metals And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precious Metals And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Precious Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Walmart Inc CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Precious Metals and Walmart

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

The idea behind Precious Metals And and Walmart Inc CDR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .