Correlation Between Walmart and Cardiol Therapeutics

Can any of the company-specific risk be diversified away by investing in both Walmart and Cardiol Therapeutics 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 Cardiol Therapeutics 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 Cardiol Therapeutics Class, you can compare the effects of market volatilities on Walmart and Cardiol Therapeutics 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 Cardiol Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Cardiol Therapeutics.

Diversification Opportunities for Walmart and Cardiol Therapeutics

-0.87

Correlation Coefficient

Walmart  Cardiol Therapeutics

Pay attention - limited upside

The 3 months correlation between Walmart and Cardiol is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Cardiol Therapeutics Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiol Therapeutics 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 Cardiol Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiol Therapeutics has no effect on the direction of Walmart i.e., Walmart and Cardiol Therapeutics go up and down completely randomly.

Pair Corralation between Walmart and Cardiol Therapeutics

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.33 times more return on investment than Cardiol Therapeutics. However, Walmart Inc CDR is 3.06 times less risky than Cardiol Therapeutics. It trades about -0.14 of its potential returns per unit of risk. Cardiol Therapeutics Class is currently generating about -0.07 per unit of risk. If you would invest  4,072  in Walmart Inc CDR on October 9, 2024 and sell it today you would lose (110.00) from holding Walmart Inc CDR or give up 2.7% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  Cardiol Therapeutics Class

Walmart Inc CDR

Risk-Adjusted Performance

15 of 100

Solid

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

Cardiol Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and Cardiol Therapeutics

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

The idea behind Walmart Inc CDR and Cardiol Therapeutics Class 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.