Correlation Between Walmart and Coveo Solutions

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

Diversification Opportunities for Walmart and Coveo Solutions

0.66

Correlation Coefficient

Walmart  Coveo Solutions

Poor diversification

The 3 months correlation between Walmart and Coveo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Coveo Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coveo Solutions 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 Coveo Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coveo Solutions has no effect on the direction of Walmart i.e., Walmart and Coveo Solutions go up and down completely randomly.

Pair Corralation between Walmart and Coveo Solutions

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.43 times more return on investment than Coveo Solutions. However, Walmart Inc CDR is 2.33 times less risky than Coveo Solutions. It trades about -0.06 of its potential returns per unit of risk. Coveo Solutions is currently generating about -0.06 per unit of risk. If you would invest  4,005  in Walmart Inc CDR on December 24, 2024 and sell it today you would lose (298.00) from holding Walmart Inc CDR or give up 7.44% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  Coveo Solutions

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Coveo Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Coveo Solutions 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 Coveo Solutions

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

The idea behind Walmart Inc CDR and Coveo Solutions 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.