Correlation Between Alaska Energy and Walmart

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

By analyzing existing cross correlation between Alaska Energy Metals and Walmart Inc CDR, you can compare the effects of market volatilities on Alaska Energy and Walmart 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 Alaska Energy with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Walmart.

Diversification Opportunities for Alaska Energy and Walmart

-0.86

Correlation Coefficient

Alaska Energy  Walmart

Pay attention - limited upside

The 3 months correlation between Alaska and Walmart is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Walmart Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart Inc CDR and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart Inc CDR has no effect on the direction of Alaska Energy i.e., Alaska Energy and Walmart go up and down completely randomly.

Pair Corralation between Alaska Energy and Walmart

Assuming the 90 days trading horizon Alaska Energy Metals is expected to under-perform the Walmart. In addition to that, Alaska Energy is 4.94 times more volatile than Walmart Inc CDR. It trades about -0.13 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.09 per unit of volatility. If you would invest  3,926  in Walmart Inc CDR on September 23, 2024 and sell it today you would earn a total of  76.00  from holding Walmart Inc CDR or generate 1.94% return on investment over 90 days.

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

Alaska Energy Metals  vs.  Walmart Inc CDR

Alaska Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Walmart Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alaska Energy and Walmart

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

The idea behind Alaska Energy Metals and Walmart Inc CDR 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.