Correlation Between Walmart and Capstone Mining

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

Diversification Opportunities for Walmart and Capstone Mining

-0.81

Correlation Coefficient

Walmart  Capstone Mining

Pay attention - limited upside

The 3 months correlation between Walmart and Capstone is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Walmart i.e., Walmart and Capstone Mining go up and down completely randomly.

Pair Corralation between Walmart and Capstone Mining

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.42 times more return on investment than Capstone Mining. However, Walmart Inc CDR is 2.37 times less risky than Capstone Mining. It trades about 0.17 of its potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.03 per unit of risk. If you would invest  3,362  in Walmart Inc CDR on October 3, 2024 and sell it today you would earn a total of  563.00  from holding Walmart Inc CDR or generate 16.75% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Capstone Mining Corp

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.

Capstone Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capstone Mining Corp 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 Capstone Mining

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

The idea behind Walmart Inc CDR and Capstone Mining Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.