Correlation Between Walmart and Oroco Resource

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

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

Diversification Opportunities for Walmart and Oroco Resource

-0.87

Correlation Coefficient

Walmart  Oroco Resource

Pay attention - limited upside

The 3 months correlation between Walmart and Oroco is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Oroco Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oroco Resource 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 Oroco Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oroco Resource Corp has no effect on the direction of Walmart i.e., Walmart and Oroco Resource go up and down completely randomly.

Pair Corralation between Walmart and Oroco Resource

Considering the 90-day investment horizon Walmart is expected to generate 0.28 times more return on investment than Oroco Resource. However, Walmart is 3.55 times less risky than Oroco Resource. It trades about 0.13 of its potential returns per unit of risk. Oroco Resource Corp is currently generating about -0.05 per unit of risk. If you would invest  4,769  in Walmart on September 4, 2024 and sell it today you would earn a total of  4,495  from holding Walmart or generate 94.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Walmart  vs.  Oroco Resource Corp

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.

Oroco Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oroco Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Walmart and Oroco Resource

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

The idea behind Walmart and Oroco Resource 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.