Correlation Between Walmart and Exxon

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

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

Diversification Opportunities for Walmart and Exxon

0.68

Correlation Coefficient

Walmart  Exxon

Poor diversification

The 3 months correlation between Walmart and Exxon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Exxon Mobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil has no effect on the direction of Walmart i.e., Walmart and Exxon go up and down completely randomly.

Pair Corralation between Walmart and Exxon

Assuming the 90 days trading horizon Walmart is expected to generate 1.09 times more return on investment than Exxon. However, Walmart is 1.09 times more volatile than Exxon Mobil. It trades about 0.16 of its potential returns per unit of risk. Exxon Mobil is currently generating about 0.17 per unit of risk. If you would invest  581,000  in Walmart on April 20, 2025 and sell it today you would earn a total of  101,000  from holding Walmart or generate 17.38% return on investment over 90 days.

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

Walmart  vs.  Exxon Mobil

Walmart

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Walmart sustained solid returns over the last few months and may actually be approaching a breakup point.

Exxon Mobil

Risk-Adjusted Performance

Good

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

Pair Trading with Walmart and Exxon

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

The idea behind Walmart and Exxon Mobil 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.