Correlation Between Walmart and Ballard Power

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

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

Diversification Opportunities for Walmart and Ballard Power

0.03

Correlation Coefficient

Walmart  Ballard Power

Significant diversification

The 3 months correlation between Walmart and Ballard is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Ballard Power Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ballard Power Systems 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 Inc CDR are associated (or correlated) with Ballard Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ballard Power Systems has no effect on the direction of Walmart i.e., Walmart and Ballard Power go up and down completely randomly.

Pair Corralation between Walmart and Ballard Power

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.46 times more return on investment than Ballard Power. However, Walmart Inc CDR is 2.15 times less risky than Ballard Power. It trades about -0.04 of its potential returns per unit of risk. Ballard Power Systems is currently generating about -0.12 per unit of risk. If you would invest  3,919  in Walmart Inc CDR on December 29, 2024 and sell it today you would lose (246.00) from holding Walmart Inc CDR or give up 6.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Walmart Inc CDR  vs.  Ballard Power Systems

Walmart Inc CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Walmart is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ballard Power Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ballard Power Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Walmart and Ballard Power

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

The idea behind Walmart Inc CDR and Ballard Power Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.