Correlation Between Walmart and Contagious Gaming

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

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

Diversification Opportunities for Walmart and Contagious Gaming

0.0

Correlation Coefficient

Walmart  Contagious Gaming

Pay attention - limited upside

The 3 months correlation between Walmart and Contagious is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Contagious Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contagious Gaming 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 Inc CDR are associated (or correlated) with Contagious Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contagious Gaming has no effect on the direction of Walmart i.e., Walmart and Contagious Gaming go up and down completely randomly.

Pair Corralation between Walmart and Contagious Gaming

Assuming the 90 days trading horizon Walmart is expected to generate 1.71 times less return on investment than Contagious Gaming. But when comparing it to its historical volatility, Walmart Inc CDR is 7.23 times less risky than Contagious Gaming. It trades about 0.13 of its potential returns per unit of risk. Contagious Gaming is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Contagious Gaming on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Contagious Gaming or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Walmart Inc CDR  vs.  Contagious Gaming

Walmart Inc CDR

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 22 (%) 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.

Contagious Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contagious Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Contagious Gaming is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Walmart and Contagious Gaming

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

The idea behind Walmart Inc CDR and Contagious Gaming 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 Transaction History module to view history of all your transactions and understand their impact on performance.