Correlation Between Sable Offshore and WALMART

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

By analyzing existing cross correlation between Sable Offshore Corp and WALMART INC 62, you can compare the effects of market volatilities on Sable Offshore 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 Sable Offshore with a short position of WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sable Offshore and WALMART.

Diversification Opportunities for Sable Offshore and WALMART

-0.06

Correlation Coefficient

Sable Offshore  WALMART

Good diversification

The 3 months correlation between Sable and WALMART is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and WALMART INC 62 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 62 and Sable Offshore 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 Sable Offshore Corp 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 62 has no effect on the direction of Sable Offshore i.e., Sable Offshore and WALMART go up and down completely randomly.

Pair Corralation between Sable Offshore and WALMART

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 5.19 times more return on investment than WALMART. However, Sable Offshore is 5.19 times more volatile than WALMART INC 62. It trades about 0.06 of its potential returns per unit of risk. WALMART INC 62 is currently generating about 0.11 per unit of risk. If you would invest  2,252  in Sable Offshore Corp on December 23, 2024 and sell it today you would earn a total of  260.00  from holding Sable Offshore Corp or generate 11.55% return on investment over 90 days.

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

Sable Offshore Corp  vs.  WALMART INC 62

Sable Offshore Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Offshore Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Sable Offshore exhibited solid returns over the last few months and may actually be approaching a breakup point.

WALMART INC 62

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WALMART INC 62 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, WALMART may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sable Offshore and WALMART

The main advantage of trading using opposite Sable Offshore and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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 Sable Offshore Corp and WALMART INC 62 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.