Correlation Between Walmart and Carillon Eagle

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

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

Diversification Opportunities for Walmart and Carillon Eagle

0.85

Correlation Coefficient

Walmart  Carillon Eagle

Very poor diversification

The 3 months correlation between Walmart and Carillon is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Carillon Eagle Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Eagle Mid 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 Carillon Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Eagle Mid has no effect on the direction of Walmart i.e., Walmart and Carillon Eagle go up and down completely randomly.

Pair Corralation between Walmart and Carillon Eagle

If you would invest  7,953  in Walmart on October 8, 2024 and sell it today you would earn a total of  1,125  from holding Walmart or generate 14.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.59%
Values	Daily Returns

Walmart  vs.  Carillon Eagle Mid

Walmart

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 15 (%) 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.

Carillon Eagle Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carillon Eagle Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Carillon Eagle 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 Carillon Eagle

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

The idea behind Walmart and Carillon Eagle Mid 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.