Correlation Between Walmart and Inpex Corp

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

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

Diversification Opportunities for Walmart and Inpex Corp

-0.41

Correlation Coefficient

Walmart  Inpex Corp

Very good diversification

The 3 months correlation between Walmart and Inpex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Inpex Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpex Corp ADR 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 Inpex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpex Corp ADR has no effect on the direction of Walmart i.e., Walmart and Inpex Corp go up and down completely randomly.

Pair Corralation between Walmart and Inpex Corp

Considering the 90-day investment horizon Walmart is expected to generate 0.55 times more return on investment than Inpex Corp. However, Walmart is 1.83 times less risky than Inpex Corp. It trades about 0.25 of its potential returns per unit of risk. Inpex Corp ADR is currently generating about -0.21 per unit of risk. If you would invest  7,971  in Walmart on August 9, 2024 and sell it today you would earn a total of  373.00  from holding Walmart or generate 4.68% return on investment over 90 days.

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

Walmart  vs.  Inpex Corp ADR

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

Inpex Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inpex Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Inpex Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Walmart and Inpex Corp

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

The idea behind Walmart and Inpex Corp ADR 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.