Correlation Between Walmart and Recharge Resources

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

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

Diversification Opportunities for Walmart and Recharge Resources

-0.66

Correlation Coefficient

Walmart  Recharge Resources

Excellent diversification

The 3 months correlation between Walmart and Recharge is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Recharge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recharge 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 Recharge Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recharge Resources has no effect on the direction of Walmart i.e., Walmart and Recharge Resources go up and down completely randomly.

Pair Corralation between Walmart and Recharge Resources

Considering the 90-day investment horizon Walmart is expected to generate 0.13 times more return on investment than Recharge Resources. However, Walmart is 7.72 times less risky than Recharge Resources. It trades about 0.54 of its potential returns per unit of risk. Recharge Resources is currently generating about 0.0 per unit of risk. If you would invest  8,195  in Walmart on September 1, 2024 and sell it today you would earn a total of  1,055  from holding Walmart or generate 12.87% return on investment over 90 days.

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

Walmart  vs.  Recharge Resources

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 weak primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Recharge Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Walmart and Recharge Resources

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

The idea behind Walmart and Recharge 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.