Correlation Between Walmart and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Walmart and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and Niagara Mohawk Power, you can compare the effects of market volatilities on Walmart and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and Niagara Mohawk.
Diversification Opportunities for Walmart and Niagara Mohawk
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Walmart and Niagara is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Walmart i.e., Walmart and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Walmart and Niagara Mohawk
Considering the 90-day investment horizon Walmart is expected to generate 0.43 times more return on investment than Niagara Mohawk. However, Walmart is 2.33 times less risky than Niagara Mohawk. It trades about 0.13 of its potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.01 per unit of risk. If you would invest 4,838 in Walmart on August 29, 2024 and sell it today you would earn a total of 4,350 from holding Walmart or generate 89.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walmart vs. Niagara Mohawk Power
Performance |
| Timeline |
| Walmart |
| Niagara Mohawk Power |
Walmart and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and Niagara Mohawk
The main advantage of trading using opposite Walmart and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| Walmart vs. Costco Wholesale Corp | Walmart vs. Dollar Tree | Walmart vs. BJs Wholesale Club | Walmart vs. Target |
| Niagara Mohawk vs. Mangazeya Mining | Niagara Mohawk vs. FitLife Brands, Common | Niagara Mohawk vs. Ultra Clean Holdings | Niagara Mohawk vs. Grocery Outlet Holding |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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