Correlation Between Walmart and Gulf Keystone

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

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

Diversification Opportunities for Walmart and Gulf Keystone

0.52

Correlation Coefficient

Walmart  Gulf Keystone

Very weak diversification

The 3 months correlation between Walmart and Gulf is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum 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 Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Walmart i.e., Walmart and Gulf Keystone go up and down completely randomly.

Pair Corralation between Walmart and Gulf Keystone

Considering the 90-day investment horizon Walmart is expected to generate 1.11 times less return on investment than Gulf Keystone. But when comparing it to its historical volatility, Walmart is 4.15 times less risky than Gulf Keystone. It trades about 0.28 of its potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Gulf Keystone Petroleum on September 4, 2024 and sell it today you would earn a total of  25.00  from holding Gulf Keystone Petroleum or generate 15.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Walmart  vs.  Gulf Keystone Petroleum

Walmart

Risk-Adjusted Performance

21 of 100

Solid

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

Gulf Keystone Petroleum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Keystone Petroleum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gulf Keystone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Gulf Keystone

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

The idea behind Walmart and Gulf Keystone Petroleum 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 CEOs Directory module to screen CEOs from public companies around the world.