Correlation Between LPKF Laser and Walmart
Can any of the company-specific risk be diversified away by investing in both LPKF Laser and Walmart 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 LPKF Laser and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPKF Laser Electronics and Walmart, you can compare the effects of market volatilities on LPKF Laser and Walmart 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 LPKF Laser with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPKF Laser and Walmart.
Diversification Opportunities for LPKF Laser and Walmart
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LPKF and Walmart is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LPKF Laser Electronics and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and LPKF Laser 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 LPKF Laser Electronics are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of LPKF Laser i.e., LPKF Laser and Walmart go up and down completely randomly.
Pair Corralation between LPKF Laser and Walmart
Assuming the 90 days horizon LPKF Laser Electronics is expected to under-perform the Walmart. In addition to that, LPKF Laser is 1.03 times more volatile than Walmart. It trades about -0.06 of its total potential returns per unit of risk. Walmart is currently generating about 0.55 per unit of volatility. If you would invest 7,662 in Walmart on August 28, 2024 and sell it today you would earn a total of 1,038 from holding Walmart or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPKF Laser Electronics vs. Walmart
Performance |
| Timeline |
| LPKF Laser Electronics |
| Walmart |
LPKF Laser and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPKF Laser and Walmart
The main advantage of trading using opposite LPKF Laser and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPKF Laser position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| LPKF Laser vs. SOUTHWEST AIRLINES | LPKF Laser vs. Granite Construction | LPKF Laser vs. EAGLE MATERIALS | LPKF Laser vs. WIMFARM SA EO |
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 CEOs Directory module to screen CEOs from public companies around the world.
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