Correlation Between Walmart and Newmont

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

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

Diversification Opportunities for Walmart and Newmont

-0.74

Correlation Coefficient

Walmart  Newmont

Pay attention - limited upside

The 3 months correlation between Walmart and Newmont is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont 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 Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of Walmart i.e., Walmart and Newmont go up and down completely randomly.

Pair Corralation between Walmart and Newmont

Assuming the 90 days horizon Walmart is expected to generate 0.54 times more return on investment than Newmont. However, Walmart is 1.86 times less risky than Newmont. It trades about 0.2 of its potential returns per unit of risk. Newmont is currently generating about -0.19 per unit of risk. If you would invest  7,699  in Walmart on October 23, 2024 and sell it today you would earn a total of  1,179  from holding Walmart or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Walmart  vs.  Newmont

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Walmart reported solid returns over the last few months and may actually be approaching a breakup point.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Walmart and Newmont

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

The idea behind Walmart and Newmont 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.