Correlation Between Walmart and Koil Energy

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

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

Diversification Opportunities for Walmart and Koil Energy

0.77

Correlation Coefficient

Walmart  Koil Energy

Poor diversification

The 3 months correlation between Walmart and Koil is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Koil Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koil Energy Solutions 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 Koil Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koil Energy Solutions has no effect on the direction of Walmart i.e., Walmart and Koil Energy go up and down completely randomly.

Pair Corralation between Walmart and Koil Energy

Considering the 90-day investment horizon Walmart is expected to generate 3.25 times less return on investment than Koil Energy. But when comparing it to its historical volatility, Walmart is 4.97 times less risky than Koil Energy. It trades about 0.26 of its potential returns per unit of risk. Koil Energy Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Koil Energy Solutions on September 12, 2024 and sell it today you would earn a total of  76.00  from holding Koil Energy Solutions or generate 62.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Walmart  vs.  Koil Energy Solutions

Walmart

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 20 (%) 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.

Koil Energy Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Koil Energy Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Koil Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Walmart and Koil Energy

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

The idea behind Walmart and Koil Energy Solutions 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.