Correlation Between Walmart and Roscan Gold

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

Diversification Opportunities for Walmart and Roscan Gold

-0.79

Correlation Coefficient

Walmart  Roscan Gold

Pay attention - limited upside

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

Pair Corralation between Walmart and Roscan Gold

Assuming the 90 days trading horizon Walmart Inc CDR is expected to generate 0.19 times more return on investment than Roscan Gold. However, Walmart Inc CDR is 5.4 times less risky than Roscan Gold. It trades about 0.12 of its potential returns per unit of risk. Roscan Gold Corp is currently generating about -0.01 per unit of risk. If you would invest  2,102  in Walmart Inc CDR on October 3, 2024 and sell it today you would earn a total of  1,823  from holding Walmart Inc CDR or generate 86.73% 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.  Roscan Gold 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.

Roscan Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roscan Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Pair Trading with Walmart and Roscan Gold

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

The idea behind Walmart Inc CDR and Roscan Gold 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.