Correlation Between Walmart and Mayfair Gold

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

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

Diversification Opportunities for Walmart and Mayfair Gold

0.26

Correlation Coefficient

Walmart  Mayfair Gold

Modest diversification

The 3 months correlation between Walmart and Mayfair is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Mayfair Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfair Gold 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 Mayfair Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfair Gold Corp has no effect on the direction of Walmart i.e., Walmart and Mayfair Gold go up and down completely randomly.

Pair Corralation between Walmart and Mayfair Gold

Considering the 90-day investment horizon Walmart is expected to under-perform the Mayfair Gold. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 2.05 times less risky than Mayfair Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Mayfair Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  117.00  in Mayfair Gold Corp on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Mayfair Gold Corp or generate 10.26% return on investment over 90 days.

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

Walmart  vs.  Mayfair Gold Corp

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Walmart is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Mayfair Gold Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mayfair Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Mayfair Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Mayfair Gold

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

The idea behind Walmart and Mayfair Gold 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.