Correlation Between Walmart and Nuinsco Resources

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

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

Diversification Opportunities for Walmart and Nuinsco Resources

-0.44

Correlation Coefficient

Walmart  Nuinsco Resources

Very good diversification

The 3 months correlation between Walmart and Nuinsco is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Nuinsco Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuinsco Resources 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 Nuinsco Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuinsco Resources has no effect on the direction of Walmart i.e., Walmart and Nuinsco Resources go up and down completely randomly.

Pair Corralation between Walmart and Nuinsco Resources

Considering the 90-day investment horizon Walmart is expected to generate 0.05 times more return on investment than Nuinsco Resources. However, Walmart is 21.8 times less risky than Nuinsco Resources. It trades about 0.56 of its potential returns per unit of risk. Nuinsco Resources Limited is currently generating about -0.07 per unit of risk. If you would invest  8,245  in Walmart on September 4, 2024 and sell it today you would earn a total of  1,106  from holding Walmart or generate 13.41% 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.  Nuinsco Resources Limited

Walmart

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 21 (%) 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.

Nuinsco Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuinsco Resources Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Nuinsco Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Nuinsco Resources

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

The idea behind Walmart and Nuinsco Resources Limited 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..