Correlation Between Walmart and Chalice Brands

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

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

Diversification Opportunities for Walmart and Chalice Brands

-0.55

Correlation Coefficient

Walmart  Chalice Brands

Excellent diversification

The 3 months correlation between Walmart and Chalice is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Chalice Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Brands 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 Chalice Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Brands has no effect on the direction of Walmart i.e., Walmart and Chalice Brands go up and down completely randomly.

Pair Corralation between Walmart and Chalice Brands

If you would invest  0.00  in Chalice Brands on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Chalice Brands or generate 0.0% return on investment over 90 days.

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

Walmart  vs.  Chalice Brands

Walmart

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chalice Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chalice Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Chalice Brands

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

The idea behind Walmart and Chalice Brands 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.

Check out your portfolio center.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.