Correlation Between Walmart and Capstone Technologies

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

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

Diversification Opportunities for Walmart and Capstone Technologies

-0.25

Correlation Coefficient

Walmart  Capstone Technologies

Very good diversification

The 3 months correlation between Walmart and Capstone is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Capstone Technologies Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Technologies 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 Capstone Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Technologies has no effect on the direction of Walmart i.e., Walmart and Capstone Technologies go up and down completely randomly.

Pair Corralation between Walmart and Capstone Technologies

Considering the 90-day investment horizon Walmart is expected to generate 2.91 times more return on investment than Capstone Technologies. However, Walmart is 2.91 times more volatile than Capstone Technologies Group. It trades about 0.07 of its potential returns per unit of risk. Capstone Technologies Group is currently generating about 0.0 per unit of risk. If you would invest  9,230  in Walmart on November 28, 2024 and sell it today you would earn a total of  539.00  from holding Walmart or generate 5.84% return on investment over 90 days.

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

Walmart  vs.  Capstone Technologies Group

Walmart

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Capstone Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Technologies Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capstone Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walmart and Capstone Technologies

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

The idea behind Walmart and Capstone Technologies Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.