Correlation Between Walmart and Kinaxis

Can any of the company-specific risk be diversified away by investing in both Walmart and Kinaxis 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 Kinaxis 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 Kinaxis, you can compare the effects of market volatilities on Walmart and Kinaxis 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 Kinaxis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Kinaxis.

Diversification Opportunities for Walmart and Kinaxis

0.85

Correlation Coefficient

Walmart  Kinaxis

Very poor diversification

The 3 months correlation between Walmart and Kinaxis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Kinaxis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinaxis 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 Kinaxis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinaxis has no effect on the direction of Walmart i.e., Walmart and Kinaxis go up and down completely randomly.

Pair Corralation between Walmart and Kinaxis

Assuming the 90 days trading horizon Walmart is expected to generate 1.07 times less return on investment than Kinaxis. But when comparing it to its historical volatility, Walmart Inc CDR is 1.74 times less risky than Kinaxis. It trades about 0.28 of its potential returns per unit of risk. Kinaxis is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  14,819  in Kinaxis on August 31, 2024 and sell it today you would earn a total of  3,092  from holding Kinaxis or generate 20.87% return on investment over 90 days.

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

Walmart Inc CDR  vs.  Kinaxis

Walmart Inc CDR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart Inc CDR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Kinaxis

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinaxis are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Kinaxis displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Kinaxis

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

The idea behind Walmart Inc CDR and Kinaxis 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 Commodity Directory module to find actively traded commodities issued by global exchanges.