Correlation Between Walmart and Ladybug Resource

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

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

Diversification Opportunities for Walmart and Ladybug Resource

-0.9

Correlation Coefficient

Walmart  Ladybug Resource

Pay attention - limited upside

The 3 months correlation between Walmart and Ladybug is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Ladybug Resource Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladybug Resource 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 Ladybug Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladybug Resource has no effect on the direction of Walmart i.e., Walmart and Ladybug Resource go up and down completely randomly.

Pair Corralation between Walmart and Ladybug Resource

Considering the 90-day investment horizon Walmart is expected to under-perform the Ladybug Resource. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 17.18 times less risky than Ladybug Resource. The stock trades about -0.02 of its potential returns per unit of risk. The Ladybug Resource Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.65  in Ladybug Resource Group on September 29, 2024 and sell it today you would earn a total of  0.05  from holding Ladybug Resource Group or generate 7.69% return on investment over 90 days.

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

Walmart  vs.  Ladybug Resource Group

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.

Ladybug Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladybug Resource Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ladybug Resource 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 Ladybug Resource

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

The idea behind Walmart and Ladybug Resource 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..