Correlation Between Public Service and Walmart

Can any of the company-specific risk be diversified away by investing in both Public Service and Walmart 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 Public Service and Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Public Service Enterprise and Walmart, you can compare the effects of market volatilities on Public Service and Walmart 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 Public Service with a short position of Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and Walmart.

Diversification Opportunities for Public Service and Walmart

-0.5

Correlation Coefficient

Public Service  Walmart

Very good diversification

The 3 months correlation between Public and Walmart is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and Public Service 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 Public Service Enterprise are associated (or correlated) with Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Public Service i.e., Public Service and Walmart go up and down completely randomly.

Pair Corralation between Public Service and Walmart

Assuming the 90 days trading horizon Public Service is expected to generate 4.83 times less return on investment than Walmart. In addition to that, Public Service is 34.35 times more volatile than Walmart. It trades about 0.0 of its total potential returns per unit of risk. Walmart is currently generating about 0.13 per unit of volatility. If you would invest  5,939  in Walmart on October 25, 2024 and sell it today you would earn a total of  21.00  from holding Walmart or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Public Service Enterprise  vs.  Walmart

Public Service Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Service Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Public Service is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Walmart

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Walmart is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Public Service and Walmart

The main advantage of trading using opposite Public Service and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.

The idea behind Public Service Enterprise and Walmart 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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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.