Correlation Between Walmart and Australian Vanadium

Can any of the company-specific risk be diversified away by investing in both Walmart and Australian Vanadium 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 Australian Vanadium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Walmart and Australian Vanadium Limited, you can compare the effects of market volatilities on Walmart and Australian Vanadium 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 Australian Vanadium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Australian Vanadium.

Diversification Opportunities for Walmart and Australian Vanadium

0.46

Correlation Coefficient

Walmart  Australian Vanadium

Very weak diversification

The 3 months correlation between Walmart and Australian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Australian Vanadium Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Vanadium 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 are associated (or correlated) with Australian Vanadium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Vanadium has no effect on the direction of Walmart i.e., Walmart and Australian Vanadium go up and down completely randomly.

Pair Corralation between Walmart and Australian Vanadium

Considering the 90-day investment horizon Walmart is expected to under-perform the Australian Vanadium. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 13.62 times less risky than Australian Vanadium. The stock trades about -0.05 of its potential returns per unit of risk. The Australian Vanadium Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.75  in Australian Vanadium Limited on December 30, 2024 and sell it today you would lose (0.25) from holding Australian Vanadium Limited or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Walmart  vs.  Australian Vanadium Limited

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Australian Vanadium

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Vanadium Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Australian Vanadium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Australian Vanadium

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

The idea behind Walmart and Australian Vanadium Limited 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.