Correlation Between Walmart and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Walmart and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and NSTAR Electric, you can compare the effects of market volatilities on Walmart and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and NSTAR Electric.
Diversification Opportunities for Walmart and NSTAR Electric
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Walmart and NSTAR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Walmart i.e., Walmart and NSTAR Electric go up and down completely randomly.
Pair Corralation between Walmart and NSTAR Electric
Considering the 90-day investment horizon Walmart is expected to generate 0.77 times more return on investment than NSTAR Electric. However, Walmart is 1.3 times less risky than NSTAR Electric. It trades about 0.15 of its potential returns per unit of risk. NSTAR Electric is currently generating about 0.09 per unit of risk. If you would invest 5,411 in Walmart on November 28, 2024 and sell it today you would earn a total of 4,358 from holding Walmart or generate 80.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 30.67% |
| Values | Daily Returns |
Walmart vs. NSTAR Electric
Performance |
| Timeline |
| Walmart |
| NSTAR Electric |
Walmart and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walmart and NSTAR Electric
The main advantage of trading using opposite Walmart and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric's long position.| Walmart vs. Aquagold International | Walmart vs. Thrivent High Yield | Walmart vs. Morningstar Unconstrained Allocation | Walmart vs. Via Renewables |
| NSTAR Electric vs. Life Time Group | NSTAR Electric vs. Arcos Dorados Holdings | NSTAR Electric vs. Alto Ingredients | NSTAR Electric vs. Griffon |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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