Correlation Between Walmart and Orca Energy

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

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

Diversification Opportunities for Walmart and Orca Energy

0.03

Correlation Coefficient

Walmart  Orca Energy

Significant diversification

The 3 months correlation between Walmart and Orca is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Orca Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca Energy Group 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 Orca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca Energy Group has no effect on the direction of Walmart i.e., Walmart and Orca Energy go up and down completely randomly.

Pair Corralation between Walmart and Orca Energy

Considering the 90-day investment horizon Walmart is expected to under-perform the Orca Energy. But the stock apears to be less risky and, when comparing its historical volatility, Walmart is 2.44 times less risky than Orca Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Orca Energy Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  207.00  in Orca Energy Group on December 28, 2024 and sell it today you would lose (7.00) from holding Orca Energy Group or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Walmart  vs.  Orca Energy Group

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Orca Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orca Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Orca Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Walmart and Orca Energy

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

The idea behind Walmart and Orca Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.