Correlation Between Walmart and Caravelle International

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

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

Diversification Opportunities for Walmart and Caravelle International

-0.44

Correlation Coefficient

Walmart  Caravelle International

Very good diversification

The 3 months correlation between Walmart and Caravelle is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International 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 are associated (or correlated) with Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Walmart i.e., Walmart and Caravelle International go up and down completely randomly.

Pair Corralation between Walmart and Caravelle International

Considering the 90-day investment horizon Walmart is expected to generate 0.14 times more return on investment than Caravelle International. However, Walmart is 7.11 times less risky than Caravelle International. It trades about 0.14 of its potential returns per unit of risk. Caravelle International Group is currently generating about 0.01 per unit of risk. If you would invest  4,676  in Walmart on September 14, 2024 and sell it today you would earn a total of  4,733  from holding Walmart or generate 101.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.47%
Values	Daily Returns

Walmart  vs.  Caravelle International Group

Walmart

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Caravelle International

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unsteady fundamental indicators, Caravelle International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Caravelle International

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

The idea behind Walmart and Caravelle International Group 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.