Correlation Between PLAYTECH and Walmart

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

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

Diversification Opportunities for PLAYTECH and Walmart

0.4

Correlation Coefficient

PLAYTECH  Walmart

Very weak diversification

The 3 months correlation between PLAYTECH and Walmart is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTECH and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart and PLAYTECH 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 PLAYTECH 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 PLAYTECH i.e., PLAYTECH and Walmart go up and down completely randomly.

Pair Corralation between PLAYTECH and Walmart

Assuming the 90 days trading horizon PLAYTECH is expected to generate 0.93 times more return on investment than Walmart. However, PLAYTECH is 1.08 times less risky than Walmart. It trades about 0.06 of its potential returns per unit of risk. Walmart is currently generating about -0.09 per unit of risk. If you would invest  845.00  in PLAYTECH on December 24, 2024 and sell it today you would earn a total of  41.00  from holding PLAYTECH or generate 4.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PLAYTECH  vs.  Walmart

PLAYTECH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTECH are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PLAYTECH is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Walmart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PLAYTECH and Walmart

The main advantage of trading using opposite PLAYTECH and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTECH 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 PLAYTECH 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.