Correlation Between Walmart and Connecticut Light
Can any of the company-specific risk be diversified away by investing in both Walmart and Connecticut Light 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 Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and The Connecticut Light, you can compare the effects of market volatilities on Walmart and Connecticut Light 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 Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Connecticut Light.
Diversification Opportunities for Walmart and Connecticut Light
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Walmart and Connecticut is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light 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 Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Walmart i.e., Walmart and Connecticut Light go up and down completely randomly.
Pair Corralation between Walmart and Connecticut Light
Considering the 90-day investment horizon Walmart is expected to generate 0.37 times more return on investment than Connecticut Light. However, Walmart is 2.73 times less risky than Connecticut Light. It trades about 0.13 of its potential returns per unit of risk. The Connecticut Light is currently generating about 0.0 per unit of risk. If you would invest 4,796 in Walmart on September 3, 2024 and sell it today you would earn a total of 4,454 from holding Walmart or generate 92.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.57% |
| Values | Daily Returns |
Walmart vs. The Connecticut Light
Performance |
| Timeline |
| Walmart |
| Connecticut Light |
Walmart and Connecticut Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Connecticut Light
The main advantage of trading using opposite Walmart and Connecticut Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Connecticut Light 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 Connecticut Light will offset losses from the drop in Connecticut Light's long position.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
| Connecticut Light vs. Hudson Pacific Properties | Connecticut Light vs. Repligen | Connecticut Light vs. Nyxoah | Connecticut Light vs. Postal Realty Trust |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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