Correlation Between Walmart and Alpine Summit

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

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

Diversification Opportunities for Walmart and Alpine Summit

-0.43

Correlation Coefficient

Walmart  Alpine Summit

Very good diversification

The 3 months correlation between Walmart and Alpine is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Alpine Summit Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Summit Energy 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 Alpine Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Summit Energy has no effect on the direction of Walmart i.e., Walmart and Alpine Summit go up and down completely randomly.

Pair Corralation between Walmart and Alpine Summit

If you would invest  5,832  in Walmart on February 23, 2024 and sell it today you would earn a total of  693.00  from holding Walmart or generate 11.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Walmart  vs.  Alpine Summit Energy

Walmart

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Alpine Summit Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpine Summit Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alpine Summit is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Walmart and Alpine Summit

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

The idea behind Walmart and Alpine Summit Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.