Correlation Between Walmart and Cargile Fund

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

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

Diversification Opportunities for Walmart and Cargile Fund

0.65

Correlation Coefficient

Walmart  Cargile Fund

Poor diversification

The 3 months correlation between Walmart and Cargile is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Cargile Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargile Fund 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 Cargile Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargile Fund has no effect on the direction of Walmart i.e., Walmart and Cargile Fund go up and down completely randomly.

Pair Corralation between Walmart and Cargile Fund

Considering the 90-day investment horizon Walmart is expected to generate 1.78 times more return on investment than Cargile Fund. However, Walmart is 1.78 times more volatile than Cargile Fund. It trades about 0.13 of its potential returns per unit of risk. Cargile Fund is currently generating about 0.01 per unit of risk. If you would invest  4,714  in Walmart on October 4, 2024 and sell it today you would earn a total of  4,289  from holding Walmart or generate 90.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Walmart  vs.  Cargile Fund

Walmart

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cargile Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargile Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Cargile Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Cargile Fund

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

The idea behind Walmart and Cargile Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.