Correlation Between Walmart and ENTERGY

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Can any of the company-specific risk be diversified away by investing in both Walmart and ENTERGY 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 ENTERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walmart and ENTERGY LA LLC, you can compare the effects of market volatilities on Walmart and ENTERGY 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 ENTERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walmart and ENTERGY.

Diversification Opportunities for Walmart and ENTERGY

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Walmart and ENTERGY is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and ENTERGY LA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENTERGY LA LLC 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 ENTERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENTERGY LA LLC has no effect on the direction of Walmart i.e., Walmart and ENTERGY go up and down completely randomly.

Pair Corralation between Walmart and ENTERGY

Considering the 90-day investment horizon Walmart is expected to generate 1.35 times more return on investment than ENTERGY. However, Walmart is 1.35 times more volatile than ENTERGY LA LLC. It trades about 0.59 of its potential returns per unit of risk. ENTERGY LA LLC is currently generating about 0.22 per unit of risk. If you would invest  9,180  in Walmart on November 9, 2024 and sell it today you would earn a total of  1,105  from holding Walmart or generate 12.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy70.0%
ValuesDaily Returns

Walmart  vs.  ENTERGY LA LLC

 Performance 
       Timeline  
Walmart 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.
ENTERGY LA LLC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ENTERGY LA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENTERGY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Walmart and ENTERGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and ENTERGY

The main advantage of trading using opposite Walmart and ENTERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart position performs unexpectedly, ENTERGY 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 ENTERGY will offset losses from the drop in ENTERGY's long position.
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The idea behind Walmart and ENTERGY LA LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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