Correlation Between Walmart and Electric Power
Can any of the company-specific risk be diversified away by investing in both Walmart and Electric Power 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 Electric Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Electric Power Development, you can compare the effects of market volatilities on Walmart and Electric Power 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 Electric Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Electric Power.
Diversification Opportunities for Walmart and Electric Power
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Electric is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Electric Power Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electric Power Devel 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 Electric Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electric Power Devel has no effect on the direction of Walmart i.e., Walmart and Electric Power go up and down completely randomly.
Pair Corralation between Walmart and Electric Power
Considering the 90-day investment horizon Walmart is expected to generate 0.99 times more return on investment than Electric Power. However, Walmart is 1.01 times less risky than Electric Power. It trades about 0.27 of its potential returns per unit of risk. Electric Power Development is currently generating about 0.04 per unit of risk. If you would invest 7,717 in Walmart on September 2, 2024 and sell it today you would earn a total of 1,533 from holding Walmart or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Electric Power Development
Performance |
| Timeline |
| Walmart |
| Electric Power Devel |
Walmart and Electric Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Electric Power
The main advantage of trading using opposite Walmart and Electric Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Electric Power 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 Electric Power will offset losses from the drop in Electric Power's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Electric Power vs. Orsted AS | Electric Power vs. Innergex Renewable Energy | Electric Power vs. Clearway Energy | Electric Power vs. Fusion Fuel Green |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |