Correlation Between Walmart and Pan Pacific
Can any of the company-specific risk be diversified away by investing in both Walmart and Pan Pacific 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 Pan Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Pan Pacific International, you can compare the effects of market volatilities on Walmart and Pan Pacific 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 Pan Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Pan Pacific.
Diversification Opportunities for Walmart and Pan Pacific
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Pan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Pan Pacific International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Pacific International 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 Pan Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Pacific International has no effect on the direction of Walmart i.e., Walmart and Pan Pacific go up and down completely randomly.
Pair Corralation between Walmart and Pan Pacific
Assuming the 90 days horizon Walmart is expected to generate 0.7 times more return on investment than Pan Pacific. However, Walmart is 1.42 times less risky than Pan Pacific. It trades about 0.48 of its potential returns per unit of risk. Pan Pacific International is currently generating about 0.11 per unit of risk. If you would invest 7,586 in Walmart on September 1, 2024 and sell it today you would earn a total of 1,166 from holding Walmart or generate 15.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Pan Pacific International
Performance |
| Timeline |
| Walmart |
| Pan Pacific International |
Walmart and Pan Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Pan Pacific
The main advantage of trading using opposite Walmart and Pan Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Pan Pacific 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 Pan Pacific will offset losses from the drop in Pan Pacific's long position.| Walmart vs. SOFTBANK P ADR | Walmart vs. REVO INSURANCE SPA | Walmart vs. ADRIATIC METALS LS 013355 | Walmart vs. Jacquet Metal Service |
| Pan Pacific vs. KINGBOARD CHEMICAL | Pan Pacific vs. X FAB Silicon Foundries | Pan Pacific vs. TIANDE CHEMICAL | Pan Pacific vs. SEKISUI CHEMICAL |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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