Correlation Between Walmart and Equinor ASA

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Walmart and Equinor ASA 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 Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Equinor ASA ADR, you can compare the effects of market volatilities on Walmart and Equinor ASA 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 Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Equinor ASA.

Diversification Opportunities for Walmart and Equinor ASA

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Walmart and Equinor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA 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 Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of Walmart i.e., Walmart and Equinor ASA go up and down completely randomly.

Pair Corralation between Walmart and Equinor ASA

Considering the 90-day investment horizon Walmart is expected to generate 1.8 times less return on investment than Equinor ASA. In addition to that, Walmart is 1.26 times more volatile than Equinor ASA ADR. It trades about 0.1 of its total potential returns per unit of risk. Equinor ASA ADR is currently generating about 0.24 per unit of volatility. If you would invest  3,472  in Equinor ASA ADR on May 21, 2022 and sell it today you would earn a total of  372.00  from holding Equinor ASA ADR or generate 10.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Walmart  vs.  Equinor ASA ADR

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 8 (%) 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.

Walmart Price Channel

Equinor ASA ADR 
Equinor Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Equinor ASA ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equinor ASA may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Equinor Price Channel

Walmart and Equinor ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Equinor ASA

The main advantage of trading using opposite Walmart and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Equinor ASA 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.
The idea behind Walmart and Equinor ASA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go