Correlation Between Walmart and NeXGold Mining

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

Diversification Opportunities for Walmart and NeXGold Mining

-0.69

Correlation Coefficient

Walmart  NeXGold Mining

Excellent diversification

The 3 months correlation between Walmart and NeXGold is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and NeXGold Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeXGold 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 NeXGold Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeXGold Mining Corp has no effect on the direction of Walmart i.e., Walmart and NeXGold Mining go up and down completely randomly.

Pair Corralation between Walmart and NeXGold Mining

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.41 times more return on investment than NeXGold Mining. However, Walmart Inc CDR is 2.45 times less risky than NeXGold Mining. It trades about 0.23 of its potential returns per unit of risk. NeXGold Mining Corp is currently generating about -0.03 per unit of risk. If you would invest  3,516  in Walmart Inc CDR on September 14, 2024 and sell it today you would earn a total of  577.00  from holding Walmart Inc CDR or generate 16.41% return on investment over 90 days.

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

Walmart Inc CDR  vs.  NeXGold Mining Corp

Walmart Inc CDR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 17 (%) 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.

NeXGold Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeXGold Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NeXGold Mining is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and NeXGold Mining

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

The idea behind Walmart Inc CDR and NeXGold 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.