Correlation Between Guardian Capital and Walmart

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

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

Diversification Opportunities for Guardian Capital and Walmart

0.72

Correlation Coefficient

Guardian Capital  Walmart

Poor diversification

The 3 months correlation between Guardian and Walmart is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Capital Group 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 Guardian Capital 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 Guardian Capital Group 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 Guardian Capital i.e., Guardian Capital and Walmart go up and down completely randomly.

Pair Corralation between Guardian Capital and Walmart

Assuming the 90 days trading horizon Guardian Capital Group is expected to under-perform the Walmart. In addition to that, Guardian Capital is 1.1 times more volatile than Walmart Inc CDR. It trades about -0.03 of its total potential returns per unit of risk. Walmart Inc CDR is currently generating about 0.21 per unit of volatility. If you would invest  2,954  in Walmart Inc CDR on September 25, 2024 and sell it today you would earn a total of  971.00  from holding Walmart Inc CDR or generate 32.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Guardian Capital Group  vs.  Walmart Inc CDR

Guardian Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Guardian Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Walmart Inc CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guardian Capital and Walmart

The main advantage of trading using opposite Guardian Capital and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian Capital 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 Guardian Capital Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.