Correlation Between Wal Mart and NTG Nordic

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

By analyzing existing cross correlation between Wal Mart de Mxico and NTG Nordic Transport, you can compare the effects of market volatilities on Wal Mart and NTG Nordic 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 Wal Mart with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wal Mart and NTG Nordic.

Diversification Opportunities for Wal Mart and NTG Nordic

0.15

Correlation Coefficient

Wal Mart  NTG Nordic

Average diversification

The 3 months correlation between Wal and NTG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wal Mart de Mxico and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Wal Mart 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 Wal Mart de Mxico are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Wal Mart i.e., Wal Mart and NTG Nordic go up and down completely randomly.

Pair Corralation between Wal Mart and NTG Nordic

Assuming the 90 days trading horizon Wal Mart de Mxico is expected to generate 1.17 times more return on investment than NTG Nordic. However, Wal Mart is 1.17 times more volatile than NTG Nordic Transport. It trades about -0.06 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.23 per unit of risk. If you would invest  278.00  in Wal Mart de Mxico on May 6, 2025 and sell it today you would lose (30.00) from holding Wal Mart de Mxico or give up 10.79% of portfolio value over 90 days.

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

Wal Mart de Mxico  vs.  NTG Nordic Transport

Wal Mart de

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wal Mart de Mxico has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Wal Mart and NTG Nordic

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

The idea behind Wal Mart de Mxico and NTG Nordic Transport 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.