Correlation Between Walmart and Tristar Gold

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

Diversification Opportunities for Walmart and Tristar Gold

-0.56

Correlation Coefficient

Walmart  Tristar Gold

Excellent diversification

The 3 months correlation between Walmart and Tristar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Walmart Inc CDR and Tristar Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tristar Gold 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 Tristar Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tristar Gold has no effect on the direction of Walmart i.e., Walmart and Tristar Gold go up and down completely randomly.

Pair Corralation between Walmart and Tristar Gold

Assuming the 90 days trading horizon Walmart is expected to generate 1.31 times less return on investment than Tristar Gold. But when comparing it to its historical volatility, Walmart Inc CDR is 5.95 times less risky than Tristar Gold. It trades about 0.13 of its potential returns per unit of risk. Tristar Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Tristar Gold on September 23, 2024 and sell it today you would lose (1.00) from holding Tristar Gold or give up 7.69% of portfolio value over 90 days.

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

Walmart Inc CDR  vs.  Tristar Gold

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 uncertain basic indicators, Walmart displayed solid returns over the last few months and may actually be approaching a breakup point.

Tristar Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tristar Gold 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 basic 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.

Pair Trading with Walmart and Tristar Gold

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

The idea behind Walmart Inc CDR and Tristar Gold 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.