Correlation Between Walmart and Premium Nickel

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

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

Diversification Opportunities for Walmart and Premium Nickel

-0.74

Correlation Coefficient

Walmart  Premium Nickel

Pay attention - limited upside

The 3 months correlation between Walmart and Premium is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Premium Nickel Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Nickel 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 Premium Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Nickel Resources has no effect on the direction of Walmart i.e., Walmart and Premium Nickel go up and down completely randomly.

Pair Corralation between Walmart and Premium Nickel

Considering the 90-day investment horizon Walmart is expected to generate 0.32 times more return on investment than Premium Nickel. However, Walmart is 3.1 times less risky than Premium Nickel. It trades about 0.08 of its potential returns per unit of risk. Premium Nickel Resources is currently generating about -0.08 per unit of risk. If you would invest  9,244  in Walmart on December 1, 2024 and sell it today you would earn a total of  617.00  from holding Walmart or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.67%
Values	Daily Returns

Walmart  vs.  Premium Nickel Resources

Walmart

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Premium Nickel Resources

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Walmart and Premium Nickel

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

The idea behind Walmart and Premium Nickel Resources 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.