Correlation Between Walmart and Orbit Garant

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

Diversification Opportunities for Walmart and Orbit Garant

0.79

Correlation Coefficient

Walmart  Orbit Garant

Poor diversification

The 3 months correlation between Walmart and Orbit is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Orbit Garant Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Garant Drilling 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 Orbit Garant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Garant Drilling has no effect on the direction of Walmart i.e., Walmart and Orbit Garant go up and down completely randomly.

Pair Corralation between Walmart and Orbit Garant

Assuming the 90 days trading horizon Walmart is expected to generate 1.91 times less return on investment than Orbit Garant. But when comparing it to its historical volatility, Walmart Inc CDR is 4.4 times less risky than Orbit Garant. It trades about 0.27 of its potential returns per unit of risk. Orbit Garant Drilling is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Orbit Garant Drilling on September 2, 2024 and sell it today you would earn a total of  21.00  from holding Orbit Garant Drilling or generate 32.81% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Orbit Garant Drilling

Walmart Inc CDR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Orbit Garant Drilling

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Garant Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Orbit Garant displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Orbit Garant

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

The idea behind Walmart Inc CDR and Orbit Garant Drilling 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.