Correlation Between Corby Spirit and Walmart

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

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

Diversification Opportunities for Corby Spirit and Walmart

0.05

Correlation Coefficient

Corby Spirit  Walmart

Significant diversification

The 3 months correlation between Corby and Walmart is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Corby Spirit and 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 Corby Spirit 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 Corby Spirit and 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 Corby Spirit i.e., Corby Spirit and Walmart go up and down completely randomly.

Pair Corralation between Corby Spirit and Walmart

Assuming the 90 days trading horizon Corby Spirit and is expected to under-perform the Walmart. But the stock apears to be less risky and, when comparing its historical volatility, Corby Spirit and is 1.22 times less risky than Walmart. The stock trades about -0.05 of its potential returns per unit of risk. The Walmart Inc CDR is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,440  in Walmart Inc CDR on September 20, 2024 and sell it today you would earn a total of  620.00  from holding Walmart Inc CDR or generate 18.02% return on investment over 90 days.

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

Corby Spirit and  vs.  Walmart Inc CDR

Corby Spirit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Walmart Inc CDR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corby Spirit and Walmart

The main advantage of trading using opposite Corby Spirit and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corby Spirit 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 Corby Spirit and 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.