Correlation Between Walmart and Kwesst Micro

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

Diversification Opportunities for Walmart and Kwesst Micro

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Walmart and Kwesst is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Kwesst Micro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kwesst Micro 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 Kwesst Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kwesst Micro Systems has no effect on the direction of Walmart i.e., Walmart and Kwesst Micro go up and down completely randomly.

Pair Corralation between Walmart and Kwesst Micro

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.07 times more return on investment than Kwesst Micro. However, Walmart Inc CDR is 14.66 times less risky than Kwesst Micro. It trades about 0.16 of its potential returns per unit of risk. Kwesst Micro Systems is currently generating about -0.01 per unit of risk. If you would invest  3,511  in Walmart Inc CDR on October 24, 2024 and sell it today you would earn a total of  522.00  from holding Walmart Inc CDR or generate 14.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walmart Inc CDR  vs.  Kwesst Micro Systems

 Performance 
       Timeline  
Walmart Inc CDR 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.
Kwesst Micro Systems 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kwesst Micro 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 fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Walmart and Kwesst Micro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Kwesst Micro

The main advantage of trading using opposite Walmart and Kwesst Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Kwesst Micro 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 Kwesst Micro will offset losses from the drop in Kwesst Micro's long position.
The idea behind Walmart Inc CDR and Kwesst Micro 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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