Correlation Between Walmart and Public Service
Can any of the company-specific risk be diversified away by investing in both Walmart and Public Service 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 Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Public Service Enterprise, you can compare the effects of market volatilities on Walmart and Public Service 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 Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Public Service.
Diversification Opportunities for Walmart and Public Service
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Public is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise 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 Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of Walmart i.e., Walmart and Public Service go up and down completely randomly.
Pair Corralation between Walmart and Public Service
Assuming the 90 days trading horizon Walmart is expected to generate 25.3 times less return on investment than Public Service. But when comparing it to its historical volatility, Walmart is 29.81 times less risky than Public Service. It trades about 0.13 of its potential returns per unit of risk. Public Service Enterprise is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,573 in Public Service Enterprise on October 25, 2024 and sell it today you would earn a total of 1,300 from holding Public Service Enterprise or generate 17.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.97% |
| Values | Daily Returns |
Walmart vs. Public Service Enterprise
Performance |
| Timeline |
| Walmart |
| Public Service Enterprise |
Walmart and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Public Service
The main advantage of trading using opposite Walmart and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| Walmart vs. Spire Healthcare Group | Walmart vs. Eco Animal Health | Walmart vs. JLEN Environmental Assets | Walmart vs. Foresight Environmental Infrastructure |
| Public Service vs. Cellnex Telecom SA | Public Service vs. Aeorema Communications Plc | Public Service vs. Travel Leisure Co | Public Service vs. Associated British Foods |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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