Correlation Between Walmart and Energem Corp

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

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

Diversification Opportunities for Walmart and Energem Corp

-0.46

Correlation Coefficient

Walmart  Energem Corp

Very good diversification

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

Pair Corralation between Walmart and Energem Corp

If you would invest  8,930  in Walmart on September 25, 2024 and sell it today you would earn a total of  338.00  from holding Walmart or generate 3.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Walmart  vs.  Energem Corp

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 uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Energem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Energem Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Walmart and Energem Corp

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

The idea behind Walmart and Energem 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.